How Chapter 7 Bankruptcy Can Help with Car Repossession
Can you get your repossessed car back after filing for bankruptcy? Generally, yes: if you fall behind in your payments and then file for Chapter 7 bankruptcy, you will likely be able to get your car back—but you shouldn’t file for bankruptcy solely to reclaim a car.
Bankruptcy proceedings before repossession
It’s easiest to keep your vehicle if you haven’t already been subjected to car repossession prior to filing for bankruptcy in Montgomery County, TX. When you fall behind on your payments, your creditor can repossess your car. Bankruptcy proceedings, however, issue a “stay” (a type of court order) to prevent creditors from engaging in any collection activities while the matter is resolved. The lender can file to revoke the stay, which would allow them to repossess your car—but there are three types of action you can take to prevent this.
First, you can redeem the car. This option allows you to buy the car in a lump sum that’s equal to the current “replacement value” of the car. The Kelley Blue Book should give you an idea of what your car would fetch on the open market considering its age, condition, make and model.
Second, you can reaffirm the car loan. This is an agreement between you and the lender in which you restructure your payments and agree to pay the debt. If you choose this option, be aware that the debt will not be discharged at the end of your bankruptcy proceedings—you will still be on the hook for the amount of the loan. If you default on the loan again, your car can be repossessed and you will still owe the deficiency amount on the reaffirmed loan.
If you have significant non-exempt equity in your car—which most people do not—your bankruptcy trustee may be entitled to sell your car and use the proceeds to pay off your creditors. If you’re concerned this may be the case, contact an attorney immediately.
Finally, if you file for Chapter 13 bankruptcy, you should be able to pay off your car loan as part of your repayment agreement. You’ll be allowed three to five years to catch up on your missed payments.
Bankruptcy proceedings after repossession
If you file for Chapter 7 bankruptcy after your car has already been repossessed, you still may be able to get it back—but you’ll have about 10 days before the car is sold at auction. In practice, most car lenders won’t halt the auction proceedings unless you have a court order, which will require the assistance of experienced bankruptcy lawyers.
Get car repossession assistance after bankruptcy in Montgomery County, TX
If your car has been repossessed, you may be able to get it back, and working with a qualified attorney will make the process easier. James R. Jones, Attorney at Law specializes in Chapter 7 bankruptcy. We represent individuals and businesses seeking to release themselves from credit card debt, unsecured loans and other financial burdens. Call us today to find out how we can help you start fresh.
Categorised in: Bankruptcy