A common situation that arises when people come into my office involves co-signors. Many people I talk to have either co-signed or had co-signers on loans. Typically these loans are for vehicles and clients wonder what will happen to co-signers if they file for bankruptcy.
This is a common questions with a pretty simple answer (most of the time). In general, the filing of a bankruptcy by one co-signor does NOT relieve the other co-signor of liability for the loan. So, for instance, if you have co-signed a loan for someone else and that person files for bankruptcy, you are still responsible for the entire amount of the loan. It often happens, of course, that the person filing for bankruptcy will choose to keep a car or other secured property. If they continue to pay on the property, then the filing of the bankruptcy will not affect the co-signor. Bankruptcy and Co-Signors
As with most bankruptcy situations, however, there is a caveat. When a bankruptcy is filed, there is a mechanism put in place called the automatic stay. It takes effect immediately upon the filing of the bankruptcy and protects the debtor from any sort of collection activities including phone calls or letters, lawsuits, wage garnishments or bank attachments. The automatic stay does not apply to any co-debtors or co-signors with the bankruptcy debtor. Or does it? There is a situation in which a co-debtor is also protected by the bankruptcy filing.
Bankruptcy Co-Debtor Stay
The bankruptcy code provides for a "co-debtor stay" in a Chapter 13 bankruptcy (11 U.S.C. 1301). The co-debtor stay will stay in effect for the duration of the Chapter 13 plan. However, a creditor can seek to get relief from the co-debtor stay unless the debt is a "consumer debt" and the debtor is re-paying the debt in full through their plan. If the creditor can show "irreparable harm" due to the co-debtor stay, the court may also grant them relief from the stay. If relief from stay is granted, the creditor can then pursue the co-debtor.
An Experienced Bankruptcy Attorney Can Help You Through the Process
You should talk to an experience bankruptcy attorney for more answers on the scope and effect of co-signing. To speak with an experienced Ohio bankruptcy attorney, or for more information on Chapter 7 and Chapter 13, call me at 330-605-3508 or visit my website at http://www.ohiobankruptcyrelief.com/.
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Driving Without Insurance in Ohio is Illegal
Many times people drive without insurance and the consequences can be severe. A common situation I see involves people who have gotten into an accident without having insurance. When there are damages, typically the other party's insurance company pays their insured customer and seeks reimbursement from the driver at fault. If the person is unable to pay, the uninsured driver can lose his license until the amount is satisfied. This is where bankruptcy comes in.
First off, coverage can be expensive, but it's required. If a person purchases automobile insurance, the State of Ohio requires the person to purchase Bodily Injury Liability Coverage as well as Property Damage Liability. In Ohio the required minimum for Bodily Injury Liability Coverage is $25,000 per person injured in any one accident and $50,000 for all persons injured in any one accident. The required minimum for Property Damage Liability Coverage is $25,000 for injury to or destruction of property of others in any one accident. The Consequences of Driving Without Insurance Can be Severe
So what is the penalty for driving without the proper amount of insurance? Failure to provide proof of financial responsibility, when required, will result in the following civil penalties imposed by the Registrar of Motor Vehicles:
■Lose driving privileges for a minimum of ninety (90) days and up to two (2) years; ■License plates and vehicle registration suspension; ■License plate reinstatement fees for first violation, second violation, and third or subsequent violation (There is an additional non-voluntary surrender fee for failing to surrender the license, plates or vehicle registration to the BMV); ■Require filing with the BMV (SR-22 or bond) to continuously maintain proof of financial responsibility for a minimum of three (3), up to five (5) years from the date of the suspension of operating privileges; ■Vehicle immobilization and confiscation of plates for 30 to 60 days for violating FR suspension. Third and subsequent offenses could result in vehicle forfeiture and a five (5) year suspension of vehicle registrations. What it Takes to Get Your License Back
Driving and registration privileges cannot be restored until all requirements of the suspension have been met. If you think this is bad, consider what can happen if you get in an accident. If you are involved in an auto accident without insurance or other proof of financial responsibility, additional penalties may apply. You may have a security suspension for two years or more and a judgment suspension for an indefinite period until the judgment is settled. These suspensions can involves several thousand dollars and people can often lose their license for years. This is where bankruptcy can come in.
How Bankruptcy Can Help You Get Your License Back
Assuming there are no other holds on your license, filing for bankruptcy will allow you to get your license back immediately. As long as there were no drugs or alcohol involved, the amounts owed to the insurance company can be discharged through bankruptcy. In fact, the Ohio Revised Code even provides that your reinstatement fee can be discharged in bankruptcy (ORC 4510.10(G)). As soon as your case is filed, you can take your paperwork to the Bureau of Motor Vehicles to get your license reinstated. An experienced bankruptcy attorney will provide you with the appropriate paperwork and guide you through the process.
You Should Call an Experienced Bankruptcy Attorney to Help You Through the Process
I'm an experienced Ohio bankruptcy attorney who has managed or filed over 2,000 cases throughout Northern Ohio. For more information on Chapter 7 and Chapter 13, call me at 330-605-3508 or visit my website at http://www.ohiobankruptcyrelief.com/.
Chapter 13 Bankruptcy Can Help You Pay Less Than You Owe on Your Vehicle
Sometimes, a Chapter 13 bankruptcy can do wonderful things. You may be able to get rid of a second mortgage or judgment liens, pay back your creditors at a fraction of what you owe, or actually pay less than you owe on a vehicle. In bankruptcy lingo, the last situation is what is called a "cramdown". A cramdown allows you to pay the value of your vehicle through your Chapter 13 plan, as opposed to what you owe. Sounds good so far. But, of course, there are conditions that must be met.
The 910 Day Rule
The most important requirement is what is called the "910 day rule" which, in essence, states that you cannot cram down a purchase money security interest in a vehicle purchased within 910 days (roughly 2 1/2 years) before the filing of your case. So if you took out a loan and purchased a car with it last year, you cannot cram it down. However, even if you cannot do a cram down, you can still often lower the interest rate on your auto loan if you pay it through the Chapter 13 plan. Currently, you can lower interest rates to about 10% on vehicles paid through your repayment plan. (This changes periodically, so check with an attorney). This alone can save you thousands of dollars over the course of your loan.
So what about about a vehicle purchased more than 910 days ago? Well, then you're in business. If you purchased your vehicle more than 910 days ago, you can pay the value of the vehicle through your Chapter 13 plan as opposed to what you owe. So, for example, if you have a vehicle that you owe $15,000 on, but that is only worth $10,000, you can pay the $10,000 (with interest, of course) through the plan and emerge with the vehicle free and clear. The Value of the Vehicle Matters
Although cramming down a loan on a vehicle is a powerful tool, one of the biggest obstacles relates to the value of the vehicle. The amount owed and the date of purchase are factual matters that are easily determined. So how do you determine just how much your car is worth? Unfortunately, this is where the bad news comes in. The value of the vehicle is determined by its replacement cost (what it would cost you to buy a new one from a dealer). This is obviously the highest value. And sometimes this prevents a cramdown on a vehicle that might otherwise qualify. However, even under these circumstances, it can still be beneficial to cram down the loan through the plan.
But there is also another caveat that can help you pay less even if you took out the loan within 910 days of the filing of your bankruptcy. The Bankruptcy Code only prevents you from cramming down a purchase money security interest. A purchase money security interest is simply a security interest in collateral that was purchased with the loan. So when you take out a car loan and use the money to buy the vehicle, the lender has a purchase money security interest in the car. The reason this is important to know is because if you took out the loan for any other purpose than to buy the vehicle (e.g. refinance), the 910 day rule does not apply. It's important to disclose this to your Chapter 13 attorney if this is your case. Call Us to Speak With an Experienced Bankruptcy Attorney
To speak with an experienced Ohio bankruptcy attorney, or for more information on Chapter 7 and Chapter 13, call me at 330-605-3508. We offer a FREE CONSULTATION where you can see if bankruptcy is right for you.
Having your car repossessed is a distressing event that can send shockwaves through your financial stability and daily routine. Whether due to unforeseen financial setbacks, missed payments, or other circumstances, having your vehicle repossessed can be overwhelming. Here we'll walk you through what to expect if your car is repossessed, shedding light on the process, the potential consequences, and offering guidance on how to navigate this challenging situation with resilience and clarity.
Creditors Can Repossess Your Car if it's a Day Late
How quickly the creditor can repossess your car depends on your contract. As soon as the payment is technically in default, the creditor can repossess it. Your contract may give you a grace period, but note that some creditors are quicker than others to show up and take your car. The type of lender you have will also determine how quickly the vehicle is repossessed. National lenders and bigger banks are more likely to repossess a vehicle when it becomes more than 60 days past due. Subprime lenders, including the financing arms of buy-here/pay-here car lots are much more likely to repossess your vehicle more quickly. If your vehicle was repossessed and you want to get it back, your best option is to contact the lender as soon as possible before more late fees and interest accrue. Creditors Don't Have to Warn You Before Repossessing Your Car
In Ohio, creditors with a lien on your vehicle don’t need a court order to repossess your car. The lien allows them to take possession of the vehicle as soon as it is in default. Whereas post-judgment collection efforts (think bank attachment or wage garnishment) allow you the opportunity to request a hearing, the vehicle repossession is immediate. Because of this, car repossessions can often be a surprise and leave owners without transportation or in need of retrieving items in the vehicle. If your car is behind, keep in mind that you risk repossession without any notice.
There is No Difference Between a Repossession and a Voluntary Surrender
The consequences of having a vehicle repossessed or voluntarily returning it are the same. The only situation where it would be different is if you have a written agreement that the creditor will not pursue the balance on the loan if the vehicle is voluntarily returned. These are very rare and, in almost every case, you’ll still be responsible for the loan balance.
You May be Able to Get Your Car Back After It is Repossessed
The creditor is required to notify you in writing that you can still get your car back. Usually this is conditioned upon the repayment of all past due amounts, plus the cost to repossess the vehicle. If you fail to pay this amount to get the car back, the creditor must also notify you of the date and time of the sale of the vehicle.
If Your Car is Sold You are Still Responsible for the Balance
If your car is repossessed and sold by the creditor, they will pay for the cost of the auction and apply the rest of the proceeds to your loan balance. If the funds are not enough to cover the balance on the loan, you are still responsible for the balance. The creditor can sue you and pursue the amount still owed, whether through wage garnishment, bank attachment or liens on any real property that you own.
Call Lake Legal Services for Help if Your Car is Repossessed
If you can’t afford what’s still owed on the vehicle, bankruptcy is one possible option. At Lake Legal Services, we’ve handled thousands of bankruptcies. Call now at 330-605-3508 or fill out our contact form to see if bankruptcy is right for you.
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