Bankruptcy Lawyers Can Help Stop Auto Repossessions

by | Sep 30, 2015 | Bankruptcy

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If a person is in debt, the first default is usually the car loan. During a default, the lender can typically repossess a vehicle without providing notice to the owner; however, bankruptcy can stop the repo process and it can even help an owner get their vehicle back. In this article information can be found on how a bankruptcy can help a person keep their car or get it back after a repossession.

Automatic Stays
The second a person files for bankruptcy, they receive an automatic stay which forces creditors to stop any collection attempts, so they cannot continue lawsuits, call a debtor, or sell, repossess or foreclose on property. With very few exceptions, the debtor is fully protected by the filing, and creditors must get the court’s permission before continuing collection efforts.

Default Before Repossession
If a person is in default, they may awaken to find their car missing after waiting too long to request a bankruptcy. In cases where repossession is imminent and the borrower cannot afford to catch up on payments, bankruptcy may be the best way to stop repossessions. Chapter 13 allows the debtor to catch up on missed payments, while giving up to five years to repay the loan, whereas a Chapter 7 filing delays repossession temporarily and gives the borrower only a few months to catch up.

Will Bankruptcy Help a Borrower Get a Vehicle Back After a Repossession?
The answer to that question depends on the timing of repossessions, and if the borrower plans to file Chapter 13 or Chapter 7. When a car is repossessed, the borrower has a short period before the vehicle is sold at auction; however, in cases where the vehicle has not yet been sold, the borrower can potentially get it back because an automatic stay will stop the vehicle sale. The borrower must act fast and file for bankruptcy before sale if they want to reclaim their car.

As desperate as it may sound, there are legal ways to keep a car from being repossessed: chapter 13 provides the best chance of reclaiming a car because it’s focused on the repayment of debts. A repossession lawyer at can evaluate a client’s case and recommend the most appropriate course of action.

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