Can Bankruptcy Stop Repossessions?
Counsel from a Bankruptcy Attorney Serving Oklahoma
When debts begin to pile up and start to become overwhelming, sometimes
consumers can fall behind on payments, especially expensive car payments.
This can lead to creditors taking actions to collect what they are owed.
In some cases, this can involve repossessions, which means the lender
will take back the vehicle they were allowing you to pay off over time.
filing for bankruptcy can help individuals who are both facing repossession and have recently
had their vehicle repossessed.
At Alexander Hilton & Associates, we have been faithfully advocating
for consumers for more than two decades. We understand how important it
is to keep vital assets like your home and your vehicle, especially when
trying to work to pay off debt, rather than gain more. Without transportation,
you could be out of a job and face even more uncertainty. That is why our
Oklahoma City bankruptcy attorney is here to help you exercise your legal rights and utilize legal strategies
to protect your possessions.
How Automatic Stays & Repayment Plans Works
By filing for Chapter 7 or
Chapter 13 bankruptcy, an automatic stay is put in place. Once this has been issued to creditors,
they are required to cease all collection action against you. That means
they cannot repossess your vehicle until further notice. In cases of
Chapter 7, you may be able to use exemptions to keep your car instead of liquidating
it to pay off creditors. In Oklahoma, the maximum value is $7,500 for
individuals and for $15,000 married couples. If the value of your vehicle
exceeds this exemption, you will be required to pay off the remaining
amount or may have to liquidate it if you cannot.
If your car has been repossessed already, you can do the following to get it back:
- File for Chapter 13 bankruptcy
- Demonstrate that your vehicle is necessary to your household
- Create a repayment plan that will cover back and future payments
- File a motion for turnover ordering the lender to return your car
You will need to work with a well-experienced bankruptcy lawyer in Oklahoma
City who knows how to effectively petition on behalf of their clients
in such matters and has experience handling repossessions.
What if I keep my car but the payments are still too high?
When filing for Chapter 13, you may be able to use a car loan “cramdown,”
which will essentially reduce your car loan to the actually value of the
car. This would make the repayment plan much more reasonable, especially
if the car has lost a significant amount of value. For example, say you
got a $25,000 loan to pay for a new car several years ago. Now, the car
has depreciated to a value of $8,000, but you still owe $18,000. By using
a cramdown, you can eliminate the $10,000 difference and reduce your loan
amount to only $8,000. You can also get your interest rate lowered in
bankruptcy court using this tactic. However, to be eligible to cramdown,
you must have bought your car around two and a half years before filing
Want to learn more about keeping your vehicle or reducing your car loan
payments? Alexander Hilton & Associates can keep you informed! Begin by
filling out a free case evaluation.