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Sometimes debts get out of hand. Medical bills, credit card debt, and payday loans start stacking up, and before you know it, the payments become overwhelming. You work hard, but you just seem to catch up. You may be curious about bankruptcy, but have valid concerns regarding the loss of necessary assets; like the vehicle you rely on. Without a vehicle to take you to and from work, you may never be able to overcome overwhelming debt.
This concern is made even worse by the lack of accessible public transportation in Thornton. If you don’t live and work right on the N Line, there simply aren’t many other options available. The state of Colorado understands this, and bankruptcy laws can help. During bankruptcy, you do not have to lose your car, and you can work with your Thornton bankruptcy attorney to find a way to ensure that you retain your transportation.
If you are at risk of vehicle repossession by lenders, you should speak to an Adams County bankruptcy lawyer right away. They’ll help you to understand all of your legal options to avoid losing your vehicle. Vehicle repossession is part of what is called a “secured loan.” Secured loans are backed by collateral; in vehicle loans, that collateral is the vehicle itself.
It’s important to understand the laws around repossession. Under Colorado law, a loan must default for 10 days before the lender can send you a notice of default. Once sent, you have 20 days to bring your loan current before they can take steps to repossess your vehicle. They will need to notify you via a Notice of the Right to Cure that you are behind on payments, as well as how much may be owed to get back into good financial standing. You have 20 days to catch up on your payments before repossession proceedings take place.
It is important to note that under Colorado law, you are only entitled to one Notice of Right to Cure every year. So if you have already received a Right to Cure notice in the last year, you will not receive another. The lender may take steps to repossess your vehicle without further notice or warning. Lenders may also repossess your vehicle if you are in breach of any of your contract terms. For example, if it is in your financial contract that the vehicle must be kept fully insured, and your coverage lapses, your vehicle can be repossessed under Colorado law. This may add to the stress of your financial circumstances, but a Thornton attorney that specializes in bankruptcy can help.
Bankruptcy in Colorado is guided by US Code Title 11. Title 11 outlines a variety of different types of bankruptcy under US law, but two are the most common. The first is Chapter 7, also known as “liquidation bankruptcy”. In Chapter 7, the debtor sells their assets and uses proceeds from that sale to settle their debts. Under Chapter 7, you are allowed a default vehicle exemption of $7,500, $12,500 if you are elderly, $15,000 if you are married, and $30,000 if the vehicle is used for work. Your Thornton bankruptcy attorney will provide guidance on how to keep your vehicle during Chapter 7 bankruptcy.
The other common type of bankruptcy for individuals in Colorado is Chapter 13. Chapter 13 is also known as “reorganization bankruptcy”, and instead of selling your assets, you work out a payment plan with your creditors. The courts take all of your debts and use them to create a lump sum that is paid over the bankruptcy term. If you meet the payment terms of the court, your debts are discharged. Chapter 13 repayment plans typically last from 3 to 5 years.
If you and your Thornton bankruptcy lawyer decide to proceed with bankruptcy, here is what to expect:
1. Pre-Bankruptcy Preparation:
Leading up to your bankruptcy, you will meet with your Adams County bankruptcy attorney to put together all the documentation, bankruptcy forms, and the bankruptcy petition. During this time you will also attend a credit counseling class approved by the U.S. Trustee’s Office. You can find a list of approved programs in Colorado on the Department of Justice website.
2. File The Bankruptcy Petition:
Once all documentation has been collected, your bankruptcy lawyer in Adams County will file a petition. During this time you will also make a plan for how you will keep your vehicle. This will be included in your exemptions or your proposed repayment plan if you are filing for Chapter 13.
3. Attend A Meeting Of Your Creditors
Next, you will attend a meeting of your creditors known as meeting 341(a). The District Court of Colorado will issue a “Notice of Commencement of Case” to let your creditors know of the meeting. At this meeting, they can ask questions or raise any objections to your bankruptcy filing, however, creditors may choose not to attend. Following this meeting, creditors have 60 days to dispute the discharge of the debt. If this happens, your Adams County bankruptcy attorney will guide your case through the dispute.
4. You Will Start The Bankruptcy Process
You will then attend a bankruptcy confirmation hearing. If you filed Chapter 7, you will begin the liquidation of your assets. If you are filing Chapter 13, you will begin your payment plan 30 days after filing. In either case, you will follow the court’s direction to have your debt discharged. You will also need to attend an accredited debt education course, which can be found on the Department of Justice website.
5. Your Debts Are Discharged By The Courts
Finally, if you meet all the requirements laid out by the bankruptcy courts, you will receive a Notice of Discharge. This notifies you and your creditors that your debts have now been discharged. The Notice of Discharge provides a clean financial standing going forward.
If you are worried about vehicle repossession, speak to a bankruptcy attorney in Thornton. They’ll review all your financial legal options and help you to retain the vehicle you need.