Keeping Your Car When You File for Chapter 7 Bankruptcy Protection

October 6, 2021 By: Carrie Weir

The Automatic Stay | What If Your Lender Asks the Bankruptcy Court for Repossession?

When you’re struggling to make ends meet and have come to the conclusion that the best way forward is through bankruptcy, one of your first concerns will center on your property. With a Chapter 7 filing, you can permanently discharge or extinguish certain debts, but you have to turn some of your property over to the bankruptcy court in exchange for that benefit. Your most important asset may be your motor vehicle, as that can be absolutely essential in helping you move forward, allowing you to get back and forth from work. Can you prevent the lender from repossessing your car?

The Automatic Stay

Upon filing for bankruptcy protection, you’ll immediately have the benefits of the automatic stay, which prevents your creditors from calling, writing or taking legal action to collect or resolve a debt. The automatic stay prohibits the car lender from repossessing your vehicle without permission from the bankruptcy court.

Can Your Lender Ask the Court for Repossession of Your Vehicle?

Yes. Your lender can always ask the bankruptcy court to lift the automatic stay and allow the vehicle to be repossessed. You have the right to oppose that request. The bankruptcy court may deny the request if there’s sufficient evidence that your creditor did not follow necessary procedure (such as providing you with proper notice).

There are, however, a number of ways that you can keep your car after filing for Chapter 7 bankruptcy:

• You may negotiate a deal with your lender, whereby the lender agrees to reduce payments and interest, waive late fees and even lower the amount still owed on the vehicle
• You can pay off the arrearage
• You may be able to claim the value of the vehicle as an exemption under state or federal bankruptcy laws. Generally, if you have less equity than the exemption amount, you’ll be able to keep the car, as the lender won’t be able to take the car and recognize any profit.

Contact an Experienced Rockwall, TX Bankruptcy Attorney

At the Law Offices of Carrie Weir, all potential clients are entitled to a free initial consultation. To arrange an appointment, contact my office online or call 972-772-3083. I handle Texas personal bankruptcy filings in Rockwall County, Collin County, Dallas County, Hunt County and the surrounding counties.