When seeking a loan to purchase a car, lenders have several ways in which they reduce their financial risk. One of these methods is by including a security agreement within the loan itself. In this agreement, the lender retains rights to repossess your vehicle.
If you find yourself in a position where you are making infrequent payments or are unable to make payments at all, this puts you at risk for auto repossession. Know that even in these unpleasant circumstances, there may still be a way to save your vehicle. Read below to learn more.
How to Stop a Repossession With Bankruptcy
For those of you who have been through our site and read our blogs, you already know there are different types of bankruptcy. They type you file thus results in varying effects on your credit and ability to retain assets. With car repossession, it’s no different.
When using Chapter 7 to avoid repossession . . .
Once filing for Chapter 7 bankruptcy, you are protected by an automatic stay. This prohibits your lender for putting you into collections or repossessing your car.
During this time, you can renegotiate the terms of your loan or, if possible, cure the default by paying back any past-due amounts. In cases where your car is worth significantly less than your loan, you can sometimes pay back only the fair-market value of your vehicle.
When using Chapter 13 to avoid repossession . . .
Similar to Chapter 13 bankruptcy, you are protected under an automatic stay as soon as you file. In this chapter, keeping your car works though working in past-due amounts into your overall repayment plan.
If You're Able, Pay Outright
The reality is, there are exceptions to the above rules. Your lender can go through the court to have your automatic stay lifted and, if granted, potentially repossess your vehicle in spite of your best efforts.
Therefore, if possible, it is always safest to fully pay back your loan. If this payment is made, it is very unlikely your lender will, or can, take any further action against you or your vehicle.
Contacting a Bankruptcy Attorney in Ohio
Depending on your financial circumstances and priorities, repaying the entirety of your loan owr working it into a payment plan may not be feasible. We understand these are difficult decisions to make and fully understand on your own, which is why we built an entire law firm around helping individuals regain control of their debt.
With us, you will get specialized care to make sure you are not only making the right financial decision for your overall goals, but are taking full advantage of the exemptions provided to you by the law.
As someone who has been on both sides of the bankruptcy process, I am dedicated to helping individuals regain control of their debt. Contact us at 216-241-2510 to speak with a bankruptcy expert in Cleveland, Ohio.