Repossession of a vehicle is a tiring and often confusing process, and making the decision to file for bankruptcy only adds to the stress. It’s important to understand the reason your vehicle is in repossession before you decide whether bankruptcy is the best solution.
Filing for bankruptcy before your car is taken may give you certain rights as a property owner to prevent further action. There are also ways to get your car back after a repossession. In today’s blog, the bankruptcy attorneys at Groce & DeArmon explain the different ways you can avoid or delay a repossession of your vehicle.
What Is Repossession?
Lenders of a secured loan may repossess property obtained through the loan if you have not been able to make payments on that loan. Repossession usually occurs on property such as vehicles or real estate, and will most often occur with notice and without force. Without further action, repossession usually results in the lender selling the property to pay off the remaining balance of the loan.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, also known as the wage earner’s plan, allows individuals with consistent income to create a plan to repay all or part of their debt. Repayment plans are typically made in installments over three to five years. This form of bankruptcy is available for all individuals with unsecured debt less than $394,725 and secured debt less than $1,184,200.
What It Means for Repossession
Chapter 13 bankruptcy prohibits the lender from repossessing your vehicle or property until the payment plan is approved by the judge. However, this may not protect you if you have filed for Chapter 13 bankruptcy in the past 30 days or you reject a personal property lease. In these cases, the creditor can ask the court to lift the automatic stay. One benefit of this type of bankruptcy is that it may reduce the balance on your loan to match the value of the property.
If you feel that Chapter 13 bankruptcy is right for you or you have questions about filing, call the bankruptcy attorneys at Groce & DeArmon.
Related Post: How To File For Chapter 13 Bankruptcy
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is the most common form of bankruptcy available to qualifying individuals, couples, or companies through the use of an overseeing Trustee. Chapter 7 bankruptcy is normally dismissed several months after the case is filed and may result in the selling of personal property and unsecured debts being wiped out.
What It Means for Repossession
Chapter 7 bankruptcy allows for an automatic stay on your property which keeps the lender from repossessing your vehicle unless they file a motion to lift the stay. In the event that the court allows the lender to proceed with repossession, Chapter 7 allows you to set forth one of the following options:
- Redeem: Buy the vehicle back from the lender in one lump sum.
- Reaffirm Debt: Agree to new terms of payment with the lender.
If you decide that Chapter 7 bankruptcy is right for you or you have questions about filing, call the bankruptcy attorneys at Groce & DeArmon for help.
Alternatives to Bankruptcy
Filing for bankruptcy is not always the best option for dealing with repossession. Here are a few things to consider before you make the decision.
- Reinstating your vehicle loan by making all past due payments in one lump sum may help you avoid filing for bankruptcy. Contact your lender right away and start by requesting a reinstatement quote. The reinstatement amount is typically viable for a short amount of time and is no longer feasible if the car is sold.
- Redeeming your vehicle is the act of paying off the remaining outstanding balance of your loan, including the fees and charges. Redemption is typically viable for a short period of time and is no longer feasible if the car is sold.
How to Get Bankruptcy and Repossession Help
It’s always a good idea to contact an experienced bankruptcy attorney at Groce & DeArmon to ensure you are making the right decision about filing for bankruptcy in the event of repossession. Schedule your free consultation with us today.
Related Post: When To Seek Legal Aid For Potential Bankruptcy