In the United States today, many Americans have just overindulged in credit purchases. But consumer debt of Americans is going through the roof and continuing to rise. In the past, people saved to buy a new car or to go on that special occasion, but now why wait when you can have it now. The credit industry has gotten out of control loaning money to people who really can't afford it. Basically, they are making them slaves to their debt.
Many young families are caught up in the old adage of keeping up with the Joneses. Their neighbors get a brand-new SUV, so guess what, they need to get one also. With young adults it's common to hear, "If I can't afford it I will sell it or give it back to the bank." These same people believe they can avoid filing bankruptcy by just giving up the property that they can no longer afford to pay on. Automobile repossession has turned into an industry of itself with large numbers of Americans that have bit off more than they can chew.
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What most people don't understand is you can't just give it back. There is a responsibility to pay the creditor of the deficiency for the depreciation of the item repossessed. If you bought a car for $20,000 and drove it for a year, it might only be worth $10,000. If that car got repossessed by the creditor for failure to pay, the creditor would oppose sale the car and maybe get $6000 for it and since the debtor only paid on the vehicle for less than a year they might owe at least $15,000 on the vehicle. The creditor will then sue the debtor for the difference plus legal fees and court costs. Getting to my point, the only way to stop this from happening is filing bankruptcy.
Filing Chapter 7 bankruptcy will wipe out any deficiency from a repossession or even a foreclosure. When an individual files Chapter 7 bankruptcy, the automatic stay is put in place the stopping all collection activity and legal action against the debtor. The power of the Automatic stay will stop foreclosure, lawsuits, judgments and wage garnishments. For an individual that can't afford a vehicle, it is a much better idea to surrender the vehicle when filing bankruptcy.
Everyone's situation is different and should be evaluated by a bankruptcy lawyer. A bankruptcy lawyer will be able to see if the individual qualifies to file Chapter 7 bankruptcy and if the debt the individual has is high enough to even make the bankruptcy filing worthwhile. Filing Chapter 7 will wipe out all unsecured debts including, credit cards, medical bills, payday loans, personal loans and any deficiency from a lawsuit or repossession. Filing bankruptcy needs to be planned out with the help of a bankruptcy lawyer. When it comes to a bankruptcy filing timing is everything. An individual should consider all of their options on what property to surrender, if any, during the personal bankruptcy. If you want to get rid of anything, it would be the time to let it go with no strings attached.
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