There are few things in life more harrowing than waking bright and early on a weekday morning, pouring a cup of coffee from a fresh pot, and walking out the door to find your car’s front axles up on a tow truck. There is nothing you can do but watch as your ride to work, your access to groceries, and your transportation to your children’s daycare gets dragged away from you. Even the words bankruptcy and repossession make millions of Americans shudder. But how much do you understand about these processes? Do you know what is safe from bankruptcy and repossession and what is not?
Separating Terms in Bankruptcy and Repossession
We often hear these terms paired together: bankruptcy and repossession. We, Groce & DeArmon, P.C., are guilty of using these terms side-by-side like this as well, but the two terms do not have to go together. In fact, one can save you from the other, so let’s take some time to demystify the phrase bankruptcy and repossession.
Bankruptcy vs Repossession
Bankruptcy can be and often is a positive thing. If you find yourself drowning in debt and can’t tread water much longer, there is no shame in contacting a bankruptcy attorney and filing for either Chapter 13 or Chapter 7 bankruptcy. Some bankruptcies take payments off your hands completely; others make payments more manageable.
Repossession occurs when you cannot make payments on debts secured to an expensive item. (We’ll go into what debts are typically secured in the next section.) A repossession can occur at any time, regardless of whether you have filed for bankruptcy or not. If you continue to drown in debt and choose not to pay a certain bill, you could find yourself getting a repo notice.
What Can Get Repossessed?
Only items that secure or insure your debt can be repossessed. So what does it mean when an item secures your debt? Let’s say your refrigerator breaks. You need a new one but can’t afford to buy one outright. You go a store that offers rent-to-own payments that allow you to use a refrigerator as you purchase it in payments over time. This payment plan puts you in a position where you own the refrigerator on the promise that you will pay the company back for it. In a sense, you have taken a loan from the company for the price of the refrigerator, and the company allows you to do this under the assumption that they can (and will) take that refrigerator back if you do not pay them. The refrigerator secures the debt and allows them to loan you the money. They can get their money back by repossessing the refrigerator.
The most common items to be repossessed are vehicles and houses. When a creditor comes to repossess your house, it is called a foreclosure. Although bankruptcy cannot eliminate these secured debts, bankruptcy can free you of other bills that make it impossible to pay your car loan or mortgage. This is one reason why bankruptcy and repossession are often paired together. Anyone on the verge of repossession should consider filing bankruptcy to keep their property from the hands of creditors.
Talk to a Groce & DeArmon, P.C. Bankruptcy Attorney Today
A local bankruptcy attorney can really help you get the best results. Whether you are looking for a Chapter 13 bankruptcy repayment plan or a full Chapter 7 bankruptcy, our law firm is here to help. Don’t wait to watch your car get towed away from you; get the help you need now.