A car loan is a legal agreement between you and a creditor. If you fail to make payments on your car loan, your creditor has a legal right to repossess your car.
Most car loans spell out the rights and obligations of the borrower and creditor, including the right to repossess a car without having to go to court and without warning when loan payments are not received.
If you file for bankruptcy, an automatic stay will be in place, preventing your creditors from undertaking collection actions against you. At the very least, this can delay the repossession of your car, if not prevent it altogether once you are able to bring your car loan current. Even if your car is repossessed, we still may be able to get your car returned to you.
The Car Repossession Process
When a car loan is defaulted on, the creditor who financed the car stands to absorb the loss. When this happens, creditors "repo" cars in order to resell them and recover a portion of the outstanding balance on their loans.
However, when a creditor decides to resell your car, you must be notified accordingly. If the car is resold at an auction, you must be notified so you can participate in the bidding process. Should a creditor decide to sell your car privately, you must be given an opportunity to pay off your loan and any storage fees or repossession charges added to your balance.
Saving Your Car Through Chapter 13 Bankruptcy
At Miller & Miller Law, LLC, in Milwaukee, we will make sure that your rights are respected and that your car lender will not take advantage of you even after repossession. A Chapter 13 likely will reduce your car payments and allow you to keep your car. We have helped many clients reduce car payments more than 50 percent.
Additionally, the actions of your creditor may impact whether or not they have a right to repo your car in the first place. Under the principle of estoppel, if your creditor has regularly accepted late payments (or payments not in full) without insisting that you adhere to the terms of your contract, their silence may be interpreted as acceptance of a change in original contract terms. If your car is repossessed, resold without notifying you, or put up for bid at auction, you can sue your creditor for damages.
Deficiency Judgments In The Event Your Car Is Sold
When a car is sold for less than what is owed on it, a creditor may try to sue you for the difference. Suppose you owed $15,000 on a car that a creditor was only able to sell for $8,000. Here, a creditor can go to court and request a deficiency judgment in the amount of $7,000 — the difference between the $15,000 you owe and the $8,000 for which the creditor was able to sell the car.
In some cases, creditors don't always follow proper procedure or notification protocols. When this happens, they may not have sufficient legal grounds for a deficiency judgment. Hiring an attorney to represent you and investigate what happened may help get your case dismissed.
Bankruptcy To Prevent Car Repossession
Under the terms of Chapter 7, depending on its value, your car can be seized in order to pay your creditors all or a portion of what you owe them. Under Chapter 13 bankruptcy, debt on a car loan can be included in your repayment plan. Consequently, you stand a better chance of keeping your car under Chapter 13 bankruptcy.
In both cases, however, declaring bankruptcy will impose an automatic stay on any collection or repossession efforts on the part of creditors. Your recently repossessed vehicle will be returned to you within hours of filing a Chapter 13.
Time Is Of The Essence. Call Now.
Talk to an auto repossession lawyer at Miller & Miller Law, LLC, to learn more about how we can help you. You can reach our law office online or call us directly at 414-326-9231.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.