Can Bankruptcy Help You Retrieve a Repossessed Car?

The average car payment is now $685. Most car loans now stretch far longer than 72 months, too. It’s little wonder that many people are currently facing repossession.

In some cases, if you wait for your car to get repossessed before you file bankruptcy you will be unable to get it back. In others, you can get your car back.

To get your car back, you will have to file Chapter 13 bankruptcy. Chapter 7 makes no provision for you to retrieve the vehicle. You will also have to prove to the trustee that you can afford the payments. They will be rolled into your Chapter 13 plan, which means they will increase your payment amount. If the trustee doesn’t think you can meet the obligation, they will not typically approve you adding those payments.

If the trustee does agree, the car company will generally give the car back. They’ll have a better chance of getting the money out of you if they leave you the vehicle to get to work, and they know it. If you’re successful in completing the plan they’ll either be paid in full at the end of it, or you will have the option of reaffirming the debt to keep the car. Either way you’re still more likely to pay off the loan, since you’ll have fewer payments competing for your attention. 

Generally you will know well in advance of a repossession that the repossession is coming. If you want to put a stop to it, you will need to file for bankruptcy. This will result in an automatic stay, which will give you more options for keeping your car. 

If you file Chapter 7 before you lose your car, for example, you’ll be able to pay the lender in full or sign a new loan contract called a reaffirmation agreement to keep the car, as long as you have exempt equity. 

Without declaring bankruptcy, your only options for getting your car back would be to reinstate the loan by bringing it current, including any towing, storage, and legal fees, or to redeem your car by paying the entire amount, including all repossession expenses. Most people who have fallen far enough behind to be facing a repossession or to need to consider bankruptcy aren’t in any position to do anything of the sort.

Not sure what to do? Not sure what your best course of action is? Contact our office to learn more today. We’ll look at your total financial situation and make the recommendations that will serve you best. We can even help you determine whether your repossession was legal in the first place…but you’ll have to act fast. 

See also:

What Will Your New York Chapter 13 Payment Look Like?

Are You Languishing in the Pre-Bankruptcy “Sweatbox?” 

When Does It Become Absolutely Critical to File for Bankruptcy?


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