Beaverton Bankruptcy: Stripping your Car of its Bank Lien

In Oregon, when filing a Chapter 13 bankruptcy petition, it used to be that the debtor could choose to strip the  the lien on their automobile. In simple terms, if you owed 10k on it was only worth 5K, you were allowed to drop the worth of the car down to its current value and reduce the interest rate on it.  As long as the values were fair, the bank would most times agree to the terms.

Post 2005, the point at which bankruptcy laws changed, the lien strip laws became tougher. As it stands, you now must own your car a total of 910 days, which equates to approximately 2 and a half years to qualify for the lien strip.  The benefits of the process are still yours, and the bank cannot stop it. 

What is useful about the lien strips is that the reduce payment allows for some debtors to then qualify for a Chapter 13 bankruptcy filing.  This is true because it allows the new payment structure to “work.”

Speaking to an experienced and knowledgeable Oregon Chapter 13 bankruptcy attorney is recommended for any type of lien strip scenario to get qualified advice in order to make an informed decision.  

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