September 25, 2017 By:
Under some circumstances even if you filed your bankruptcy shortly after a repossession, you may be able to get your vehicle back. The timing is extremely critical here, and you would have to meet certain conditions. The point is that the “automatic stay” is very powerful.
However, once the repossession is prevented, what then? The two different consumer bankruptcy options—Chapter 7 and Chapter 13—each help in different ways.
A Chapter 7 “straight bankruptcy” stops the repo, and then you quickly have to make a choice: do you want to keep the vehicle, and can you afford to, or will you instead surrender it?
If you want to keep the vehicle you will likely need to catch up on the late payments within a month or two after the bankruptcy filing. Most vehicle loan creditors will not give you more time than that, especially the big national ones. That’s in part because if you want to keep the vehicle you will be required to sign a “reaffirmation agreement” excluding this debt from the discharge of your debts. By law that agreement must be filed at court before the entry of the court order discharging all your debts. And that generally happens about three months after your case is filed. So your creditor will very likely want you to be current on your loan before that reaffirmation agreement is prepared and filed at court.
If you can’t pay the loan current that quickly but want or need to keep the vehicle, one possible solution is a Chapter 13 case, discussed below.
Otherwise, you will likely need to surrender the vehicle. Although losing your vehicle may not sound like a good idea, sometimes it’s the best way to go. And probably the best time for that to happen is during your bankruptcy case.
The advantages to surrendering the vehicle are
You can also surrender your vehicle if you are filing a Chapter 13 case. But Chapter 13 gives you some of advantages over Chapter 7 if you want to keep your vehicle:
Chapter 13 does come with disadvantages. It is much more expensive and takes years instead of months. It may take longer to re-establish your credit record. Chapter 13 should not be entered into lightly.
Experienced bankruptcy lawyer Carrie Weir can help you stop a pending vehicle repossession by helping you decide whether Chapter 7 or Chapter 13 is your better option. Contact me if you are in the Dallas-Fort WorthMetroplex, and work or live in and aroundRockwall, Heath, Greenville, Lavon, Wylie, Mesquite, Royse City, Sachse, or Rowlett, Texas. I canmeet with you in a free and confidential consultation. If you want to contact me outside of business hours, please use this this contact form.