Struggling with debt is a stressful experience which can be expounded by having your vehicle repossessed. When you default on a car loan by missing a payment, the lender of your automobile loan has the right to repossess your automobile. If you’re in danger of having your automobile taken, there are steps that you can take to either prevent your car from being repossessed or get your repossessed car back with bankruptcy.
Bankruptcy Prevents Repossession
If you have defaulted on your car loan, the best step is to immediately contact your lender to ask for ways to get caught up. These actions can range from modifying the original loan and rolling the missing amount into the new loan to simply allowing you an extra month to bring the loan payments current. If your auto lender isn’t willing to negotiate and threatens repossession, filing for Chapter 7 bankruptcy will prohibit the creditor from pursuing any collection activities, including “collecting” your automobile. It’s important to note that your auto loan lender can ask the court to lift the stay and so the automatic stay should be viewed as a way to give yourself time to either reorganize your debt, find the income to pay off the vehicle, or to give the car up.
Chapter 7 Bankruptcy and Repossession
You may be able to use Chapter 7 bankruptcy to acquire your car back after repossession if you have equity that is nonexempt in the vehicle. In order to keep your car in a Chapter 7 bankruptcy, you must either pay the lender in full or sign a new loan contract. A new contract, or reaffirmation agreement, is essentially a new contract, and so a possible benefit of reaffirmation is the ability to work out more favorable terms. Your bankruptcy can take the appropriate measures with the bankruptcy trustee to allow you to assume the new debt payment.
Chapter 13 Bankruptcy and Repossession
Assuming that you’ve already had the vehicle repossessed, filing Chapter 13 bankruptcy within the 10 day notice period will allow you to demand your automobile back, as well as, allow you to roll the amount owed into your three to five year Chapter 13 bankruptcy repayment plan. As long as you can make the care payment during your Chapter 13 bankruptcy, you keep your vehicle. For this reason, Chapter 13 bankruptcy is an excellent way to eliminate debt for individuals who own property and have a steady stream of income.
Time is of the Essence
If you have already had your automobile repossessed, you must act quickly to ensure you don’t miss out on the opportunity to get your car back. In Texas, a lender must wait 10 days before they sell your car or truck. If the lender does go through with the sale, you as the debtor are responsible for the difference between the loan balance and the sales price.
Bankruptcy Can Decrease Your Auto Loan
Another reason to move fast after falling behind on your car payments is the bankruptcy “cram down”. If you owe more on a truck than it is worth, you may be able to also use bankruptcy to cram down or decrease your auto loan balance to match the current market value of the automobile, which stands to save you a lot of money.
Contact a Houston Bankruptcy Attorney
For citizens living in the Southern District of Texas Bankruptcy Court jurisdiction, contact a Houston Bankruptcy Attorney if you are seeking to prevent repossession or get your car back after repossession. An experienced Texas bankruptcy lawyer will have the expertise needed to file your bankruptcy petition and the necessary motions, help you reaffirm an auto loan, and guide you through the entire Chapter 7 or Chapter 13 bankruptcy process.