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For most of us, a personal vehicle isn’t an amenity, it’s a necessity – particularly if we live in an area poorly served by public transportation.
If you’ve fallen behind on your car payments and are worried about repossession, filing a Chapter 7 or Chapter 13 bankruptcy before your vehicle is repossessed may allow you to keep it. At the very least, it will buy you valuable time to make other transportation arrangements.
Bankruptcy works in a couple ways to prevent repossession. First, the moment a bankruptcy is filed, an automatic stay goes into effect. This is an operation of law that will prevent your lender from continuing with efforts to repossess your vehicle while the stay is in effect. Second, a Chapter 13 bankruptcy can be used to get current on car payments by reorganizing your car debt to make repayment more affordable.
Lenders often choose to work with vehicle owners instead of moving to repossess their vehicle. If repossession is a real possibility for you, your lender needs to be contacted immediately so that you can make payment arrangements. If too much time passes between the threats of action and the time you contact them, the car is likely to be repossessed and sold for less than your loan amount and then the lender will come back to you seeking the difference between those amounts. That’s a worst-case scenario – and, fortunately, it can be avoided most of the time.
At the free initial consultation, we’ll sit down with you and look at whether keeping the car is possible or realistic, or whether repossession makes more sense. We’ll also be happy to answer any questions you have and explain the various available options.
Car Repossession You have a better chance of preventing vehicle repossession than disputing it after the fact. So contact your creditor as soon as you realize you’ll be late with a payment.