If you filed for Chapter 13 bankruptcy in San Jose under the old law, you could have chosen to "strip down" the auto lien on your vehicle. Stripping down an auto lien means reducing the debt you owe on your vehicle. In other words, you would reduce your car payment to the value of the car only and you get to pay a lower interest rate.

Note that your car is considered a secured debt under Chapter 13. A secured debt is a debt where the creditor takes your property as collateral. Homes and vehicles are examples of secured debts. If you do not pay your secured debt, your creditor has the right to take your vehicle or home.

With the new bankruptcy law in effect, auto lien stripping has been restricted. Now you can only reduce the principal owed and the interest rate on your vehicle if you bought your car more than two and a half years (910 days to be exact) prior to your bankruptcy filing. Call Sagaria Law to schedule an appointment in San Jose for a free consultation to get you started on the road to a fresh start.