If your car is in danger of being repossessed – or if your lender has already taken it — filing for Chapter 7 bankruptcy can be a smart move.
By filing, you’ll have time to find a way to keep your vehicle. Or, if you’d rather let it go and not have to worry about owing any money for the car, that outcome is possible through bankruptcy. Take a look at the following to learn more about how Chapter 7 can help you handle a car repossession.
Bankruptcy Puts a Temporary Stop to Car Repossession
File for Chapter 7 bankruptcy, and your auto loan lender will not be able to repossess your car – at least for a little while. This is thanks to the automatic stay, a court order that prevents all of your creditors from attempting to collect the debts you owe.
However, your lender can get around the bankruptcy automatic stay by filing a motion with the court. And if you’re behind on your loan payments, the judge will likely grant the motion and let the car repossession take place.
Bankruptcy May Help You Get a Repossessed Car Back
If your car has already been repossessed, you might be able to get it back by filing for bankruptcy. To do so, however, you’ll need to move quickly – wait too long, and the vehicle may no longer be available to you.
In most cases, cars that are repossessed are sold at auction within a few weeks. As long as you file for bankruptcy before your vehicle is put up for sale, you have a chance to get it back.
Bankruptcy Provides You with Options for Keeping Your Car
You can save your car from repossession or get it back if you take one of these approaches while the bankruptcy automatic stay remains in effect:
- Catch up on your missed car payments
- Negotiate new loan terms, keeping in mind that doing so makes you liable for the debt
- Redeem the vehicle, buying it for the fair market value in a single lump sum payment
If none of these is a practical solution given your financial situation, yet you still want to keep your car, ask a bankruptcy attorney if filing for Chapter 13 will help you achieve that goal.
Schedule a Free Bankruptcy Attorney Consultation
Many bankruptcy attorneys – including the team here at the Law Office of Davis & Jones, P.C. – offer free consultations. So why not get expert advice on how to handle your car repossession?
If you live in northern Utah and want to talk to an experienced bankruptcy lawyer, reach out to our Salt Lake City office. We’d be happy to answer your questions, explain your options and help you decide on the best course of action for debt relief. For more information on car repossession and Chapter 7 bankruptcy, contact us today.