Month: May 2023

Repossession is on the rise; Bankruptcy stops it dead in its tracks.

repossession

The COVID-19 pandemic wreaked havoc on the economy, leaving many people struggling to make ends meet. To help alleviate some of the financial strain, the government implemented a number of relief measures, including eviction and foreclosure moratoriums and loan forbearance programs. These measures also provided temporary relief for people who were struggling to keep up with car payments. However, as interest rates and auto prices continue to rise, many people are finding themselves at risk of repossession. In this blog post, we’ll explore why repossession rates are on the rise and how bankruptcy can help stop car repossessions.

Rising interest rates and auto prices

The pandemic has led to a shortage of new cars, which has caused prices to skyrocket. Additionally, interest rates have risen, making it more expensive to finance a car. This is a dangerous combination for people who are already struggling to make car payments. Many people are finding themselves in a situation where they owe more on their car than it’s worth, making it difficult to sell or trade in the vehicle.

The consequences of car repossession

When you finance a car, the lender has the right to repossess the vehicle if you fail to make payments. Repossession can have serious consequences, including damage to your credit score, legal fees, and the loss of your vehicle. Additionally, if the lender sells the car for less than you owe, you could be responsible for the difference.

How bankruptcy can help

Bankruptcy can be a powerful tool for stopping car repossession. When you file for bankruptcy, an automatic stay goes into effect, which prevents creditors from taking collection actions against you, including repossession. This means that if your car is about to be repossessed, filing for bankruptcy can provide immediate relief and give you time to figure out a plan to keep the car.

There are two types of bankruptcy that can help stop car repossession: Chapter 7 and Chapter 13. In a Chapter 7 bankruptcy, you can discharge most of your unsecured debt, including credit card debt and personal loans. This can free up money to help you make your car payments. Additionally, in some cases, you may be able to keep your car by reaffirming the debt, which means that you agree to continue making payments on the car.

In a Chapter 13 bankruptcy, you create a repayment plan that allows you to pay off your debts over a period of three to five years. This can give you time to catch up on missed car payments and get your finances back on track. Additionally, if you owe more on your car than it’s worth, you may be able to “cram down” the debt, which means that you only have to pay the current value of the car.

What it all means

The pandemic relief measures provided temporary relief for people who were struggling to make car payments, but as interest rates and auto prices continue to rise, many people are finding themselves at risk of repossession. If you’re in danger of losing your car, bankruptcy can be a powerful tool for stopping repossession and giving you time to figure out a plan to keep your vehicle. However, bankruptcy should not be taken lightly and should only be pursued after careful consideration and consultation with a bankruptcy attorney.

The Perils of Buy Now, Pay Later

Buy Now Pay Later

The pandemic has upended many aspects of our lives, including the way we shop and pay for groceries. With inflation driving up prices and squeezing household budgets, more Americans are turning to buy now, pay later (BNPL) apps to make ends meet. These apps offer instant credit, allowing consumers to spread out their payments over time. However, while BNPL apps can be a convenient way to manage short-term cash flow issues, they can also lead to deeper debt problems in the long run.

The rise of Buy Now Pay Later apps

BNPL apps have been around for a few years, but they have gained significant traction during the pandemic. Companies like Affirm, Afterpay, and Klarna allow consumers to purchase goods online or in-store and split the cost into smaller, interest-free payments over time. This can be an attractive option for people who are struggling to make ends meet, as it allows them to spread out their payments and avoid taking on more debt through traditional credit cards.

The downside of BNPL

While BNPL apps can be a lifeline for people who are struggling financially, they can also lead to deeper debt problems. For one thing, these apps often have higher fees and interest rates than traditional credit cards, especially if you miss a payment. Additionally, BNPL apps can encourage people to overspend, as the smaller, more manageable payments can make purchases seem more affordable than they actually are.

The impact of inflation

With inflation on the rise, more Americans are turning to BNPL apps to help make ends meet. According to a recent survey by Credit Karma, nearly 40% of Americans have used a BNPL app in the past year. Of those, 26% said they did so because they couldn’t afford to pay for their purchases upfront.

Bankruptcy as a solution

For those who find themselves struggling with debt, bankruptcy can be a viable option for getting back on track. Bankruptcy allows individuals to discharge most of their unsecured debt, including credit card debt, Buy Now Pay Later debt and personal loans. While bankruptcy can have a negative impact on your credit score and make it harder to get credit in the immediate future, it can also provide a fresh start and a path to financial stability.

However, bankruptcy should not be taken lightly. It can have consequences and should only be pursued after careful consideration and consultation with a bankruptcy attorney. ¬†BNPL apps can be a convenient way to manage short-term cash flow issues, they can also lead to deeper debt problems in the long run. With inflation squeezing budgets and more Americans turning to BNPL apps to make ends meet, it’s important to be mindful of the potential pitfalls of these apps and to seek out help if you find yourself struggling with debt. Whether through bankruptcy or other means, there are options available for those who need help getting their finances back on track.