Vehicle Loans and Bankruptcy

A car payment is one of the more common types of secured loans. Most of us enjoy having access to transportation whenever we want it. We need to be able to get to our jobs, school, grocery stores, and doctors easily. Having a lifestyle that allows us access to transportation usually comes with a car payment.

If you fall behind in your payments, it is much easier for a lender to repossess or take back your vehicle for non-payment. In most vehicle purchase contracts, the right is given to the lender to take back the car any time payments are late if they wanted to, they could take possession of the vehicle after one missed payment. Bankruptcy can stop a repossession and give you time to catch up on your payments.

Lenders Will Work With You

In some states, missing vehicle insurance payments have the same consequences as missing a car payment. Most lenders don’t want to take your car back. The cost involved in hiring a third party to obtain the vehicle plus the depreciated value of the vehicle makes it an expensive prospect. The lender would prefer to work with you, so you can continue the payments with interest.

After the late payment, you will receive a notice from the lender, reminding you to make a payment with possibly a late fee attached. If you continue to miss payments, the lender has the right to come onto your property and repossess the vehicle. The person taking the vehicle may not be threatening, use force, or enter a locked garage without your permission.

You Can Get Your Car Back

You have the right to redeem the car by paying the amount you owe and any cost from the repossession. If the car is sold, most states require that the sale is in a “Commercially Reasonable Manner.” They don’t have to sell the car at full market value but not so far below the market that it is evident that the sale was not commercially reasonable. If they sell the car way below market value, you may have grounds for damages and claim in defense against a deficiency judgment.

If you are behind in your debt and worry they will be coming for your car any day now, contact a Hidalgo County bankruptcy attorney to find out how you can get financial relief.