Filing Chapter 7 Can Stop Repossessions
Most of us rely heavily on our vehicles. It is our transportation to work, how we get our children to school, and our security blanket knowing we can get where we need to go when we need to get there. Vehicle loan payments are the second largest expense for most households, just behind mortgages or rent. Not making the loan payments for your car may lead to the repossession of your vehicle.
If you file a bankruptcy immediately after a vehicle repossession you can often get your car back. If you have had your vehicle repossessed because you couldn’t make the payments, you may be asking yourself, “Can I get my car back if I file a bankruptcy?” In many cases the answer is yes. Your specific circumstances will determine the best solution, but a bankruptcy may be the answer if you act quickly.
A better understanding of how repossessions work will give you an insight as to if a bankruptcy consultation will be helpful. If you default on your car loan the bank or lender can repossess your vehicle.
Once the bank has the car in their possession, they tend to sell the car at an auto auction to recover the remaining balance on your car loan. Often the sale price will not cover the full loan leaving you a deficiency balance to pay even though you no longer have the car.
There are options in filing a Chapter 13 for getting a repossessed vehicle back from the lender and keeping it with a more manageable payment. A Chapter 7 bankruptcy can give you a clean slate from the car loan all together. If your circumstances have changed and you can no longer afford the loan either type of bankruptcy will also discharge any potential repossession deficiency.
What if you are behind on your car loan, and the threat of repossession is looming? Filing a Chapter 7 bankruptcy or a Chapter 13 bankruptcy will stop the creditor from repossessing your automobile. A law called the automatic stay prohibits the lender from repossessing the car while you are in bankruptcy.
To move forward with repossession the lender must file a motion with the court asking that the automatic stay be lifted. Filing Chapter 7 in Springfield Missouri will give you a limited amount of time before the lender is allowed to proceed with the repossession, but often this is enough for clients to work something out with the lender or find a replacement mode of transportation.
A Chapter 13 bankruptcy is a way to retain the vehicle and pay back the missed payments as well as the existing loan over time. This will often reduce the monthly expense on the car loan by paying the balance of the loan over a 5-year period and utilizing the interest rate allowed by the court. This interest rate does vary but is almost always less than the rate of the existing loan especially if a “buy here pay here” lender was used to finance your vehicle.
Filing a bankruptcy will stop a repossession. Additionally, filing a bankruptcy can get your car back if it has been repossessed but not already sold by the lender. Knowing your bankruptcy options is the first step in making the best decision regarding your vehicle loan. Our knowledgeable bankruptcy attorneys will be a valuable resource in determining your best course of action.