Are you behind on your car payments, or unable to make them on a regular basis? If so, your lender might be considering repossessing your vehicle.
This is where the automatic stay comes in.
The moment you file bankruptcy, the lender is ordered by the court not to repossess your car. However, the lender can file a motion with the court for “relief” from the automatic stay, so that it can continue its repossession efforts. It will have to show that you are in default or not making timely payments.
You can oppose this motion, either because the lender has failed to record your payments (factual), or because they failed to serve you with the motion (procedural). If you are not working towards a solution with the lender to cure your default, the judge may allow the lender to repossess your vehicle.
However, the lender would much rather have your money, in the form of payments, than have your car, which is a depreciating asset that is likely to be worth less than you owe. In some cases, they’ll reduce the amount you owe once it becomes clear that bankruptcy will discharge the remaining loan amount if they repossess your car, leaving them with ONLY the car in exchange for the debt.
See also 3 Ways to Deal with Car Loans in Bankruptcy.
Chapter 13 bankruptcy could save your car
Since Chapter 13 is a repayment plan, odds are a judge will not lift the stay for the lender while your repayment plan is being worked out. As long as your plan takes into account back payments, and current payments, and you keep your plan payments up to date, the lender is not allowed to repossess your car.
If your car is repossessed just before you file for bankruptcy, you might be able to get it
by immediately filing a Motion for Turnover of the vehicle under 11 U.S.C. § 542(a).
An experienced bankruptcy attorney can help you do this.
I’m scared to file bankruptcy, but I also don’t want to lose my car. What do I do?
It’s free to chat with me about your options – you can call or text me at 215.551.7109, or drop me a line.
