Car repossessed? Here’s what you can do about it.

If you’ve had a car repossessed recently, you might be wondering what will happen next or even if you can get the car back.  Here’s a quick primer:

First, you’ve had your car repossessed if you’ve defaulted on the loan.  Usually that default is a failure to make payments.  Shortly following the repossession you will receive a Notice of Right to Cure from the lender.  This Notice will explain your rights and obligations, and if you have the funds to pay the arrears in full then you can regain possession of the car.  However, if you need the car and do not have the funds to fully cure the arrears, you can still get your car back – by filing a Chapter 13 bankruptcy petition.  Filing under Chapter 13 allows you to cure the arrears over three or five years (depending upon your income and other debts) and keep the car as long as you can make the monthly loan payments as well as your plan payments.

But what if you don’t want the car back?  Chances are, the car will sell at auction and there will be a deficiency on your account (meaning, the car did not sell for as much as you owe on the loan).  In this case, the lender can sue you for that deficiency amount, obtain a judgment against you, and then garnish your wages, levy on your bank accounts, or place a lien on your real property.  You can avoid this by filing a Chapter 7 bankruptcy petition and “surrendering” your ownership interest in the car. You are then discharged of the underlying debt and will no longer be liable for any deficiency on the account.

If you’ve had a car repossessed and need to explore your options, contact us to schedule your free consultation.

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