You might be curious whether filing a Chapter 7 or Chapter 13 bankruptcy would help you get your car back if it was repossessed due to nonpayment. Since each case is unique, answering this question can be challenging. Here’s what you need to do about filing a bankruptcy petition to get your car back after it’s been repossessed.
Your Bank or Lender May Be Able to Return Your Car Under Certain Circumstances
In most cases, once a person files a Chapter 13 bankruptcy application, they will be able to reclaim their vehicle after it has been repossessed.
Many vehicle creditors have been apt to reach an agreement with the car owner to get the vehicle back to them quickly, provided the owner can give proof of insurance and show a copy of a Chapter 13 arrangement guaranteeing full payment of the loan.
When bankruptcy is filed, federal law requires something known as an automatic stay; an action that forbids creditors from pursuing debts outside of the bankruptcy case. Creditors are prohibited from taking any action to retain ownership or control of property included in a bankruptcy claim, until the claim is resolved.
That said, the claimant could be forced by the bankruptcy court to file an action to get a court order directing the lender to return the car to its owner.
Will You Still Get Your Car Back If You’re Filing a Chapter 7 Bankruptcy?
If a debtor does not want to seek the return of their car, they may file a Chapter 7 bankruptcy application to be released from owing the debt. However, this will not result in the return of the vehicle. However, this could be a sensible option if the debtor can find alternative means of transportation and only wants a fresh economic start.
How Taking Initiative Before Repossession Can Benefit You
Before your car is repossessed, the best course of action is to pursue a Chapter 13 claim. If a person misses more than 60 days on a car payment, some creditors may think about repossessing the vehicle. However, other creditors will act faster; even if an account is delinquent for fewer than 60 days, some lenders will still dispatch a tow truck to seize the car.
A Chapter 13 petition prohibits a car from being repossessed and includes a payment schedule that helps the driver pay back their debt and retain their vehicle. It’s far less expensive to avoid having a car repossessed by filing for Chapter 13 bankruptcy than it is to fight to get it back after it has been confiscated.
Get help filing a Chapter 13 from an experienced attorney at Sims Bankruptcy Law, PLLC. Call now at 469-751-7467 (Dallas-Fort Worth) or 254-304-7161 (Central Texas).