If you are filing for bankruptcy in Chandler, AZ you may be wondering how this procedure will affect your automobile loan status. Car loans are typically one of the larger bills that people pay each month. In addition to the considerable cost, people rely on having good transportation to get back and forth to work every day. If you are filing for bankruptcy, it is understandable to be concerned about your car loans. There are a few things to consider depending upon the type of bankruptcy that you file for.

Chapter 7 Bankruptcy Concerns

If you are filing for Chapter 7, or liquidation bankruptcy the intention is to get rid of as much of your consumer debt as possible. You may have a bit of a challenge in getting your car payment written off when you file Chapter 7. The most recent Arizona and nationwide bankruptcy laws require a person, who is filing for Chapter 7 bankruptcy, to repay the retail replacement value of the car. This is often more than many people can afford. If you are not able to pay that kind of price for your car, you can surrender the car to your creditor instead. The older bankruptcy laws required a person to pay the private sales value to lenders. This amount is typically much lower, but is no longer an option under the current bankruptcy laws.

Chapter 13 Bankruptcy Concerns

If you are filing for Chapter 13 bankruptcy, you will have a different set of concerns. Under Chapter 13 you will be required to repay the entire car loan, if you purchased the car within 910 days of filing for bankruptcy. You will be required to pay the full amount for your automobile, even if the blue book value of your car is significantly lower than the entire amount owed. It is a good idea to calculate how long ago your purchased your car so you know where you stand in regard to this stipulation. You may decide that the payment is just too much. If that is the case, you can choose to forfeit the car or have the lender repossess it.

Getting a Car Loan After Bankruptcy

A big concern for most people after filing bankruptcy is getting a new car loan. You need to have reliable transportation, but may find it difficult to get a loan for another car. One of the best options would be to save up and pay cash for a used car. This will keep you from having a new monthly payment to worry about. If you can find a reliable car for a good price, buying one for cash is a great decision that will help ease your financial burdens. You may be able to find loans for another car, but be prepared to pay a decent down payment and expect higher interest rates on your car loan. You may be considered a high risk loan, so lenders will take precautions by jacking up interest rates. The more you can pay in cash; the better off you will be when it comes to getting a new car after bankruptcy.