Thu. Oct 31st, 2024
Repossession Explained: Can Bankruptcy Be Your Solution?

Nobody likes the thought of losing their vehicle as a result of repossession; it is possibly one of the most fear-inducing and overwhelming experiences one can undergo. In the case of a repossession, people ask themselves questions like these: where will they go to work without a car? What will be the source that feeds their entire family? What kind of a vainglorious impact will a repossession cause to one’s credit and file, and by extension, resources?

Do you feel bad that you have been unable to keep up with the payments on your vehicle? Are you worried that your vehicle may be repossessed? Here’s good news — a bankruptcy attorney California can come in handy for you.

What Is Repossession?

In this case, it is a very serious matter since when you purchase and bring the vehicle to your house, you may start to believe that it is yours. However, if you obtain a loan to buy it – and 80% do – the car is not yours.

The institution that lent you the money, in this case, a bank, credit union, or other institution, owns the car. That’s why the lender will take back the car if you do not pay. In other cases, such as this, it simply means: Repossessed!

Some people lose their residences due to this process, too. The lender may retrieve houses, necklaces, chairs, and even clothes, or anything else that is used to get lending.

How Bankruptcy Could Help You Avoid Repossession

If you’re struggling with your car payments and other obligations, bankruptcy could be useful in averting repossession. There are many perspectives from where bankruptcy could be seen as an option that will halt the repossession; one such perspective is the court order known as an “automatic stay”. This order goes into effect upon the filing of bankruptcy with the court. 

It suspends any additional collection efforts from creditors against the debtor case that has filed for bankruptcy. It does not matter if you are filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy; once the bankruptcy is filed, an automatic stay is imposed on the repossession of vehicles and all other collection activities.

But both Chapter 7 and Chapter 13 bankruptcy have options for the debtor to retain the car. However, the way how this vehicle debt is resolved both during and after the bankruptcy hinges on one’s financial standing coupled with the type of bankruptcy that is filed.

In order to avoid losing their vehicle during Chapter 7 bankruptcy, residents of Alabama can avail themselves of the wild card exemption. If that is not an option, you can use the automatic stay delay in repossession to buy time and look for a solution with the lender. A reaffirmation of the loan is also possible.

This allows a buyer to purchase the car from the lender at the market value, but the payment must be made in full at once. All of these options need to get the okay from the bankruptcy court. It is likely that, during the automatic stay, you would have been able to stop payments, making it possible for you to afford to assist with these options.

As long as you agree to repay the lender the value of the vehicle from your disposable income through a Chapter 13 bankruptcy plan, which is made up of monthly payments over a 3 – 5-year period, you can keep possession of your vehicle-like asset during Chapter 13. Your plan of vehicle repayment should also consider any overdue payments that are due against the asset.

Conclusion

If bankruptcy is your only option to avoid repossession, do not wait for the repossession man to knock at your door. Instead, reach out to a seasoned bankruptcy lawyer to determine how bankruptcy can aid you in holding onto the car.

References:

  1. https://www.brockandstout.com/blog/the-repossession-process-and-how-bankruptcy-can-help/
  2. https://www.debt.org/faqs/repossession/
  3. https://www.burrlawoffice.com/car-repossession-bankruptcy/

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