While the economy continues its slow slog towards recovery, banks and consumers are struggling. As the auto lender market has thinned, banks have continued to lower credit requirements for borrowers. This has led to an increase in the subprime auto loan market, similar to the one that wrecked the housing market during the last recession. According to reports, 36 percent of auto loans issued in the second quarter were made to subprime borrowers. Consumers should be wary as these loans may carry higher interest rates that make repayment difficult.
A car can play an integral role in an individual's life. But when Income falls because of reduced hours or unemployment, making minimum payments may be challenging. Other financial challenges, like a medical emergency, might make paying on the auto loan impossible. When this happens and a bank seeks repossession, the borrower should know his options.
One option often chosen by those in this situation is to file for bankruptcy. By filing for bankruptcy, the borrower may have a stay put on the repossession, which will allow him to use the car for a little longer and develop another transportation plan. The vehicle may still be repossessed, but time can play an important part in keeping the filer's life steady and predictable.
A Chapter 7 bankruptcy, also known as liquidation, allows the individual to eliminate debt and reach a new financial start by selling assets. Proceeds from the sale go to pay down debt, but any debt remaining after the sale might be forgiven, allowing the filer to reach a new start.
An Alabama bankruptcy attorney can help an individual file for bankruptcy, try to obtain a stay, and seek to keep property that fits into certain exceptions. Additionally, the attorney can insist creditor harassment be stopped. Our society believes in second chances. When missed payments leave one feeling hopeless, a bankruptcy attorney can be the helping hand to that second chance.
Source: Wealth Daily, "The Rise of the Subprime Auto Loan: Banks Take on High Risk," Joseph Cafariello, Sep. 26, 2013