Help! My Car Is Being Repossessed!

Image courtesy of Michal Marcol / freedigitalphotos.net

Without your car, how would you get to work? How would you get your children to school? If you fall behind on your car payments, you may have the repo man at your door.  You can give in and let him take it or you can protect yourself.  A bankruptcy protection plan can help you keep your car and get your payments back on track.  It can also keep the repo man away from taking your vehicle!

When you file for bankruptcy protection, you receive what is called an “automatic stay” on collection of your debts.  While the stay is in effect, your car cannot be repossessed. 

Here is how bankruptcy has more protection for you if you decide to file a Chapter 13.

• You can your reorganize your payments and spread them out over the course of your payment plan.  This can give you 30 to 60 more months to pay for your vehicle and you get to keep the car as long as the bankruptcy payments are being made to the trustee.
• If you are upside down on your loan or you owe more than the vehicle is worth, you may be able to pay less than you owe.  For example, let’s say you owe $10,000 on your car but your car is worth $7,000.  You may be able to reduce the amount you owe in your reorganization plan.
• If you think your vehicle is not worth keeping, you can include the amount you owe in your reorganization plan and walk away.

Here is something you should never do---let the bank repossess your car and think you are no longer responsible for the debt.  When banks repossess vehicles, they usually sell them at car auctions.  If they get less than you promised to pay for the car, the bank may come after you again for the rest of the money.  You may face a garnishment or a lawsuit for the amount still owed on the vehicle, even though it was repossessed by the bank.

Most people who are having trouble making their car payments are also having trouble paying their other bills.  Filing for bankruptcy can help you keep your car and begin to reestablish your financial future.  But if you wait, you could end up with judgments and garnishments.  We are here to help you consider your options and protect your assets, including your vehicle.