Bankruptcy Can Protect Your Car From Repossession
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Bankruptcy Can Protect Your Car From Repossession

On Behalf of | Mar 27, 2018 | Uncategorized |

Repossession of a car is a difficult situation for any individual to face. If you have actually had your car repossessed due to the fact that you were unable to make payments in time, you might be wondering if you can get your car back with the help of bankruptcy.

While the precise conditions differ by state, for the most parts the response is indeed– filing bankruptcy can assist you in getting your vehicle back. The trick is to act swiftly and also to understand precisely just what you need to carry out in order to make this happen.


How Chapter 7 Can Help

Once you file bankruptcy, the court grants you a so-called “automatic stay” which doesn’t allow creditors to engage in any collection activities including repossessing your car. On the other hand, almost always lenders file a Motion to Lift the Stay asking the bankruptcy court if they can proceed with the repossession. To protect your vehicle it is recommended to try the following remedies.

Redeem the property.  Chapter 7 bankruptcy permits you to get the car back from the lender paying one lump sum. The good news is, you redeem the vehicle in a quantity equivalent to the “replacement value” of the car. So, instead of paying off a huge loan balance (which in many cases exceeds the car worth), you could get the vehicle back by paying just what a retail seller would charge for the automobile, taking into account its age and condition.

Reaffirm the car loan. An additional alternative is to reaffirm the loan with the creditor. After that you and the loan provider arrange new payment terms. For instance, you could be able to wrap your payments right into a new finance amount, or tack them onto the end of the car loan repayment period. However, you should be careful and think twice before reaffirming a car loan since your personal liability for the loan is not released at the end of your bankruptcy. And thus, if you fail to perform obligations on the loan and the vehicle is repossessed, you will be liable for the deficiency balance. (If you give up the car during the bankruptcy, your liability for any deficiency is usually discharged).

How Chapter 13 Bankruptcy Can Help

When you are behind on your bills because of Divorce, loss of a job or Medical and credit card bills, and you are facing Foreclosure, Repossession, or Garnishments, if you want to keep your vehicle and home you may need to file a Chapter 13 Bankruptcy case (also known as a “Wage Earners Plan”). If you act quickly,  you can repay any car loan arrears through your Chapter 13 repayment plan. So, if you can make your regular car note payment and your plan payments, you’ll have the ability to keep your auto. The automated stay puts on Chapter 13 too, so you must be able to stop any pending repossession sale.


If Your Car Was Repossessed Prior To Filing For Bankruptcy

If your automobile was repossessed before you filed for bankruptcy, you may be able to get the car back by applying for bankruptcy. Yet you should act quickly. Normally, once the vehicle is sold at public auction, you won’t get it back. The time period between repossession as well as auction sale differs by state, however is typically around 10 days.

Legitimately, if you have nonexempt equity in your car, the loan provider must return the car because it is part of the bankruptcy estate, and the repossession in this case will be considered as an illegal preference. This means  a creditor was “preferred” by receiving payment within 90 days of your bankruptcy. The trustee has the power to decide who gets paid, not creditors. Virtually, however, auto loan lenders will not return the vehicle without an order from the court, which usually means you’ll need the help of a professional bankruptcy lawyer.

Once you have the car back, you’ll still have to either redeem the car or reaffirm the contract in order to keep the car.

Getting Help

Dealing with repossession by yourself could be extremely complicated. To get help, contact Jack Setters – with a huge experience of dealing with bankruptcy cases, together you will be able to find the best option.