Can a Bankruptcy Stop the Repossession of My Vehicle?
Jan. 31, 2023
It can be very stressful when every day you wake up and you wonder if your car is still in the driveway. Thankfully, filing a bankruptcy can stop the threat of repossession. Knowing your rights is a big reason why you should hire a St. Louis Bankruptcy Attorney! Upon a bankruptcy filing, an automatic stay goes into effect that prevents creditors from taking any collection action against you. This includes stopping a car lender from being able to repossess your vehicle.
There are two main types of bankruptcy that can provide this protection: Chapter 7 and Chapter 13. In a Chapter 7 bankruptcy, you do get a temporary protection from a repossession once your case is filed. However, you would still need to continue to make your payments on your vehicle if you wish to keep it after the bankruptcy ends. If you wish to surrender your vehicle, the Chapter 7 will discharge your liability in the vehicle and you will not have to pay back any remaining balance on the vehicle.
In a Chapter 13 bankruptcy, you can propose a repayment plan that includes your car payments and pay off your vehicle debt over time. This can be helpful because the Court’s interest rate may be more beneficial than the contract interest rate. Additionally, the Chapter 13 allows you to repay the vehicle up to 5 years. This can stretch out and reduce your outgoing monthly payment helping you financially.
It is important to file the bankruptcy prior to the vehicle being repossessed. Once they repossess the vehicle, you are not able to get it back by filing a Chapter 7. In certain circumstances, you can get the vehicle back after filing for a Chapter 13 bankruptcy. Consulting with a St. Louis Bankruptcy Attorney can help you understand your options and determine the best course of action for your specific situation.
You can call my office anytime at 314-740-2989 to discuss your options!