Cram down your car in a chapter 13

Cramming down a car in a chapter 13 is a great way to save money and also reduce your disposable monthly income so that you have a cheaper plan payment. If your car is more than 910 days from when you financed it, then you can pay what the car is currently worth on kelly’s blue book or your opinion based on damage etc. Chapter 13 will allow you to pay it off over 5 years instead of the time that you have left which can really lower your payments. It will also help you with reducing disposable monthly income because if you have a financed car then you get a deduction of 496 dollars minus what your car payment is divided over 60 months or 36 months if you are below the median income for your family size. If you own your car outright the ownership expense is much less so it actually helps to keep a financed car through a chapter 13. Chapter 7 allows you to keep your car and continue to make finance payments but you can’t bring it down to current market value.

Frequently Asked Questions: Debt Consolidation in California
How does debt consolidation affect credit scores?

Initially, it might cause a slight dip due to credit inquiries. However, consistent payments can improve your credit score over time.

What is the difference between debt consolidation and debt settlement?

Debt consolidation involves taking a new loan to pay off debts, while debt settlement is negotiating to pay less than you owe. Settlement can negatively impact your credit score.

What are secured vs. unsecured debt consolidation loans?

Secured loans require collateral (like a house or car), usually with lower interest rates. Unsecured loans don't require collateral but typically have higher rates.

Is debt consolidation right for me?

It depends on your total debt, interest rates, credit score, and payment capability. It's suitable if you can pay off your debt within five years and secure a lower interest rate than your current debts.

Should I consider long-term financial planning?

Yes, debt consolidation should be part of a broader financial strategy including budgeting, cutting expenses, and building an emergency fund.

How do Chapter 7 and Chapter 13 bankruptcies in California differ?

Chapter 7 involves liquidating assets to pay off debts, while Chapter 13 allows debt restructuring over a set period, usually three to five years.

Can my spouse's bank account be garnished for my debt?

Bankruptcy laws offer protections against such actions, but specifics depend on individual cases and state laws.

How can I learn more about my options?

Consulting a California bankruptcy attorney can provide clarity. Firms like The Law Offices of Christopher Hewitt offer free consultations to explore debt relief paths.

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