Stop Car Repossession

Need know how to stop your car from being repossessed?

If you are making payments on a car or other expensive purchase, the creditor can take back the collateral if you fall behind on payments. Car finance companies are entitled to self help. That means they can take the car back without court order as long as they do not disturb the peace. They cannot enter your garage, for instance, though it happens. For other large purchases, such as furniture, appliances, electronics and jewelry, the creditor must get a court order and have the sheriff take the property back. This requires high legal fees and it’s rarely worth the money for the creditor.

A car repossession can put you into a financial tailspin. Most people need a car to get to work or take care of other responsibilities. The thought of repossession can be a nightmare lurking in the back of your mind. It doesn’t come out of nowhere. You know when you are behind on a car and the car company will typically remind you numerous times before repossession.

Most car companies will not repossess your car until you have fallen at least two months behind on your payments. Once your car is repossessed, you have only days to catch up on the loan before it is sold at auction. The auction price is usually low and often there is a substantial balance on the car after sale. This remaining debt is called a deficiency and you can wipe it out in bankruptcy.

Can filing for a Chapter 7 bankruptcy stop car repossession?

A Chapter 7 bankruptcy will only stop the repossession for a temporary period. If you are unable to catch up on the car payments, the creditor can ask the bankruptcy judge to allow the repossession in as little as a month. You will get a month’s notice if the creditor makes the effort. Often it takes longer but Chapter 7 usually lasts only three months and the car company does not need the judge’s permission after it discharges and closes. A Chapter 7 may give you a chance to catch up on the loan by wiping out other debt. Often you can keep enough cash in a Chapter 7 to purchase a replacement car while you rebuild your credit.

You can consolidate your car loan with other debt in a Chapter 13 plan. As long as you stay current on your plan payments and keep the car fully insured, the threat of repossession is gone. Your plan does have to be confirmed by a bankruptcy judge. As long as the plan is confirmed, you just need to make your payments for three to five years and you will get the title to your car. However, you may not be able to include a leased car in a Chapter 13 plan.

FREE consultation with our Washington State bankruptcy lawyers.

Put an end to your worry – give our Washington State bankruptcy lawyers a call today and learn about how you can prevent your car from being repossessed. Together, we can help you determine if filing for bankruptcy is indeed your best solution.

(253) 444-5869