When you file for Chapter 7 bankruptcy, is your car safe from repossession? And what if your car is repossessed shortly before you file for Chapter 13? Can you get it back?
When you file for Chapter 13 bankruptcy, most creditors are instantly prohibited from continuing collection efforts against you. This is called the "automatic stay." The automatic stay also prevents your car loan lender from repossessing your car.
The automatic stay can protect you in two different situations: When the lender has not repossessed your car before you file for bankruptcy, and when the lender has already repossessed your car when you file for bankruptcy.
If the lender has not repossessed your car and you file for bankruptcy, the automatic stay prevents the lender from repossessing your car until the bankruptcy judge approves your repayment plan.
Then, if your repayment plan deals with the back payments (the arrearage) on your car loan, the lender cannot repossess your car during and after the bankruptcy (assuming you stay current on your payments).
In some cases, if your car is repossessed shortly before you file for bankruptcy, you may be able to get the car back if payment of the arrearage is provided for in your repayment plan and you are able to continue making your monthly payments. If your car has been repossessed and you plan to file for Chapter 13 bankruptcy, contact our office immediately.
For these and other questions, please contact Salinas bankruptcy attorney Clark Miller, who is committed to getting your life back on track.