While consumers struggle with debt and payment of loans, it’s often very common for them to also fall behind car loan payments. This increases the likelihood of the vehicle being repossessed by the financier. Bankruptcy protection was set up to help debtors with the cases when such an unfortunate event as mentioned above happens mainly due to loss of income. Whatever your reason for not making payments, you might want to consider filing for bankruptcy protection. The question from many debtors always surrounds the power of the Chapter 7 bankruptcy file. Can the creditor possess your vehicle once you file for the protection rights? Is Chapter 7 your best bet? Can a lawyer help tackle such a case?
The key to getting your car back is stopping the process before the vehicle goes to auction. If the lender has sold your car already, Chapter 7 bankruptcy generally can’t help you get it back. But, if you file before the sale, you’ll still have a chance, says local Long Island, NY bankruptcy attorney, Adam C. Gommerman.
This piece aims at highlighting some of the important details you might want to know about Chapter 7 bankruptcy and its protection against your assets. Specifically, in this case, your car.
What To Expect After Filing For Bankruptcy
No Threats from Debt Collectors
There is nothing as unsettling as numerous calls from the loan collection representatives demanding for their payments while you are not in a position to make payments. Filing Chapter 7 Bankruptcy gives you space to breathe. You will not receive any more threats from the collectors.
When They Go Silent, Does It Mean They Have Rights To Repossess My Car?
Unfortunately, yes. The financier still has the rights to repossess your vehicle. But here’s the catch; only the court can decide your fate. In the case where the court finds that you are late on your payments and you agreed to the terms of the loan agreement, the automatic stay is likely to be lifted. With the automatic stay lifted, your vehicle can be retrieved.
Filing Bankruptcy Gives You Time Before Setting the Repossession Process in Motion
The law can provide you with time to play the case to your advantage. To repossess the vehicle, the creditors must file a motion to have the automatic stay lifted. You will have fourteen days to counter the action. The court is going to give you a chance to defend yourself within thirty days. Your only defense at this point involves taking advantage of any faults caused by the creditors, for instance, not keeping track of all payments that you have evidence of paying.
How to Avoid Car Repossession After Having Filed Chapter 7 Bankruptcy
If you wish to retain your vehicle, you have a few options to prevent repossession.
Work with the Creditor to Keep Up with Car Payments
Your creditor is after you because you have arrears in your loan status. A creditor wouldn’t let you off easily with both a car loan balance and the vehicle itself. If you show the ability to pay up your arrears and cover the debt, most creditors won’t even bother filing a motion to repossess your car. In most cases, many debtors are behind payments that it seems unrealistic for them to settle the loan on time.
Negotiate with the Creditor
Vehicle financiers get most of the business profits from interest payments loans. Most would rather have a debtor keep their car and continue making their loan payments. You may use this concept to negotiate another deal with the lender. Have them adjust the contract in a way that you will pay the loans smoothly. You might consider asking them to reduce the repayment amounts, reduce the interest rates or even decrease the entire principal value. These negotiations only after the initial contract to friendly modes and give you the chance to escape from the retrieval tragedy.
Can You Win Back Your Car After Retrieval by Filing Chapter 7 Bankruptcy?
When the milk is already spilled and the lenders have already repossessed the car, you might have a chance to winning back your vehicle. You can buy back the car for its current market value. This option requires you to file a motion with the court and pay up a lump sum amount.
You should access the deal before jumping at it. If the car’s value is significantly less than your loan balance, this would be the best time to redeem it. Once the deal is done, you are free from the contract linking you to the lenders. For instance, if the car’s current value stands at $4,000, and you have an outstanding debt of $5,000 on the car, you are only required to pay the market value which in this case is $4,000. Once it’s settled, you have redeemed the car legally with no arrears left behind.
We understand that the law isn’t easy to for an ordinary citizen to understand. It is, therefore, important to navigate through every phase with an bankruptcy attorney to help you tackle every legal issue before you.