Should I Refinance or File Chapter 13 Bankruptcy?

Here at SmallerCarPayments.com we often hear of people being behind of their auto loans because their payments are too high, and they aren't sure if they should apply for an auto loan refinance or file chapter 13 bankruptcy. Chances are if you are behind on your payments your credit score has already taken a big hit and you now suffering from a poor credit score along with a past-due car note.

While bankruptcy can be a very helpful tool for individuals under insurmountable debt it is not for everyone. For example, if you are behind on your car loan because of high payments, but it is the only debt you have or are behind on, then we suggest refinancing.

Why Refinancing is Better

Refinancing allows you to lower your monthly payments by either extending the loan term or getting a lower interest rate. Because you already have poor credit from being behind on your payments chances are you will not be offered a lower interest rate; so you will need to extend the loan term. Unfortunately, by extending the loan term you will be paying more in interest in the long run, but it will help you save money in the short term which is the goal.

Filing for bankruptcy will keep you locked in to paying all of your debt for the next three to five years, and those debts that you weren't behind on before - like your mortgage - could be affected. It could show your creditor that you are trying to "take the easy way out" which is how some may see it if you're not falling behind. But, if you do decide to file for chapter 13 and it still has not helped your payments refinancing your car loan after bk is possible.

Find a Refi Lender Near You

Many people have no idea where to start the auto loan refinancing process which is where we can help. We work with a network of local subprime auto refi lenders that can give you your best chance at an approval with rates that can fit your budget. If you're ready to get your car loan debt under control apply online with us today.