Tag Archives: Stopping repossession

Bankruptcy can save your car or truck from being repossessed or seized by creditors

It is undisputed our nation has a love for our cars, trucks, motorcycles and recreational vehicles. While they are not always assets appreciating in value, they are significant assets to many of us who rely on our cars to get to work, school, the grocery store, vacations and anywhere we want to go. As we spend money repairing and improving our cars and trucks, they become worth more to us than their fair market value. To keep our assets protected in the event of a financial emergency, the bankruptcy laws can help us keep our cars and trucks from being repossessed or lost to creditors.

Bankruptcy can stop repossession of your car or truck if you default on your auto loan.

If someone is behind on their auto loan payments, the loan servicer can take swift action to repossess vehicles. Most auto loan contracts contain provisions allowing someone to “cure” their payment default and get their car, truck or RV returned to them, even if it was already repossessed. In many cases the person on the auto loan will receive a notice from the lender that the loan is in default and the vehicle may be repossessed. Bankruptcy can stop repossession. In the event the repo-man is on his way or just recently repossessed a vehicle, the automatic stay provision of the bankruptcy code legally prevents lenders from engaging in collection activities while someone is in bankruptcy, including repossessing vehicles.

If in a bankruptcy, a car loan can be reaffirmed or the car could be exempt and kept if paid off.

In the event someone is in a bankruptcy and the car payment is current, there is an option to sign a reaffirmation agreement with the lender. This simply states that despite being in a Chapter 7 or Chapter 13 bankruptcy, the individual pledges to keep making payments on the vehicle so that the automatic stay provision is not a problem and the lender is assured the bankruptcy will have no adverse affect on the auto loan. If however, the vehicle is paid in full there are bankruptcy code provisions that may allow an individual to keep their vehicle, as opposed to it being sold by the bankruptcy trustee to pay off creditors. The exemption rules allow bankruptcy petitioners to keep a certain amount of value and assets without threat of seizure and sale by the trustee.

Chapter 13 bankruptcy offers additional protections for auto loans and vehicles.

While a Chapter 7 bankruptcy eliminates all dischargeable debts, there are income and financial requirements to meet and not everyone qualifies for Chapter 7. The alternative, Chapter 13 bankruptcy reorganizes debts and allows creditors to get caught up with their obligations over a long period of time, three to five years in many cases. If the car loan is a high interest loan the Chapter 13 bankruptcy process can cause a modification of the loan and reduce the payment or length of the loan. During the Chapter 13 bankruptcy, the individual makes set monthly payments to the bankruptcy trustee who then makes payments to creditors including the holders of the car or truck loan.

The bankruptcy code can be complicated but there are many of its features a bankruptcy attorney can use to help someone keep their car, truck or recreational vehicle.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start. To keep in touch and read about consumer finance news and stories you can “Like” the firm’s Facebook page and “Follow” Joseph Wrobel. Ltd. on Twitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney today.