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Can I file bankruptcy on a car loan when the car was totaled?

Along with credit card debt and medical bills, one type of debt that I see quite a bit is a loan balance on a car that has been repossessed. The person got behind on the payments, the car was repo'd and sold, and there was a balance left over. Sometimes this can be many thousands of dollars!

But one situation that also comes up is where a car is totaled in an accident. The auto insurance carrier steps in and pays the claim on the car, but the amount is not enough to pay off the loan. This can also lead to a balance of several thousand dollars.

Good News: You Can Discharge It!

The good news is that this loan shortfall can be discharged in a bankruptcy, whether a chapter 7 or a chapter 13. There is nothing special about the debt; it is really no different than a balance owed to a credit card bank or a hospital.

In fact, it is a debt incurred through no fault of your own (unless you were at fault for the accident). But sometimes these car loan deficiencies can make a barely manageable situation with high credit card balances, unmanageable.

So What Do I Do?

If a car repo (or insurance) deficiency is the final straw for your financial camel, you live in South Jersey, and are considering filing bankruptcy, call my office at 856-432-4113 or contact me through this site for a free consultation to discuss your case.

If you are looking for more information about bankruptcy, then download my free book,Top Questions People Ask About Filing Bankruptcy in New Jersey.

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Steven J. Richardson
Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.