Is Your Car About to Be Repossessed?
 Bankruptcy Can Help

Many money lenders are able to repossess a car if you're a month or more late on your payment. Often, they don't even need to notify you that you're late: they can just send someone to confiscate the vehicle. This can be a tremendously stressful problem if you rely upon your transportation to get to your job or to take care of your family. Luckily, beginning the process of bankruptcy can help.

Declaring Bankruptcy to Halt a Repossession

When you begin the process of bankruptcy, lenders are required to immediately cease any collections actions. This includes calling you regarding your open accounts, levying additional judgments, and taking you to court for your debt. Bankruptcy places a "pause" on your current debt situation so you can take some time to sort through your finances and figure out the best solution for you.

If your car is currently marked for repossession, the lender will be notified that they cannot repossess your vehicle or take collections actions during this time. They can appeal this with the court, but it will take time for them to do so. During this time, you may be able to resolve the situation.

Getting Permission to Repossess a Car

A lender may be able to get permission from the court to repossess the car if they can show that they are being sufficiently financially harmed. The lender will need to petition the court for this permission, and the process will usually take a couple of weeks. This is called a "motion for relief from the automatic stay."

The lender will have to show that you have been late in payments or that you are in default of your loan. You may be able to oppose this motion, and if you do so, the process may take around 30 days. If you have actually made your payments on time, you may be able to appeal the repossession at this time.

Avoiding Repossession During Bankruptcy

Even if a lender is given the opportunity to repossess your vehicle, you can still possibly convince them to do otherwise. If you can get your  account current, the lender may not repossess your car. You may even be  able to negotiate a way to rehabilitate your account by making several  on-time payments.

Lenders often don't want to repossess a car  because they lose money on each car they repossess. Not only has the car depreciated in value (it may not be worth what you owe on it), but they need to maintain it, repair it, and sell it on their own. All of this  is going to cost money. This does give you some negotiating power.

Keeping Your Car During Chapter 7 Bankruptcy

If you can negotiate with your lender, you could possibly keep your  vehicle through the entire process of Chapter 7 bankruptcy. It's all  about the amount of equity you have in your vehicle.

If your  vehicle is worth $10,000 but you owe $5,000, you really only have $5,000 in equity in the car. This amount would fall under the vehicle  allowance that a Chapter 7 bankruptcy provides. On the other hand, if  you have a $20,000 car that you owe $3,000 on, the court will likely  encourage you to liquidate it to pay off your debts.

Going  through a repossession can be a stressful experience, as your vehicle  can be taken at any time. Vehicles can be towed from your place of work, your home, or even a friend's home, depending on how aggressive the  company is. If you want to protect yourself, you need to declare  bankruptcy as soon as possible. Schedule you free consultation with Brace W. Luquire, Attorney at Law today.