Can Your Car Be Repossessed During Bankruptcy?

Charlotte Bankruptcy attorney Bryan W. Stone answers the question: “Does my spouse have to file bankruptcy if I do?”


When you file for either Chapter 7 or Chapter 13 bankruptcy protection, the good news is that an automatic stay immediately goes into effect. This automatic stay is a crucial part of the bankruptcy process and is often a big benefit to debtors who are finally given some relief from the stress they have been under.


Tow Truck Charlotte Bankruptcy Lawyer North Carolina Chapter 7 Chapter 13 AttorneyWhat is an automatic stay?


The automatic stay prevents your creditors from continuing any collection efforts against you. That means no calls, no letters and no harassment of any kind. This also means that car loan lenders are prohibited from repossessing your car.


What about in a Chapter 13?


Assuming the lender has not already repossessed the car, the automatic stay will prevent the lender from taking the car back until the bankruptcy judge approves your Chapter 13 repayment plan. Once this repayment plan goes into effect then the lender will be receiving money on a regular basis and will still not be able to repossess the car. So long as your back payments are dealt with, the car should be safely yours during the Chapter 13 process.

What about in a Chapter 7?


The automatic stay continues to protect debtors during a Chapter 7, but it can be gotten around if the lender asks the bankruptcy judge for permission to lift the stay and repossess your car. You can oppose any motion by a lender for repossession, but you must have a good reason for why the judge should not allow the repossession. If you have stopped making payments and are not working to solve the problem, chances are the judge will allow the lender to take the car.


How to avoid repossession in a Chapter 7?
If you want to keep your car there are a few things you can do. First, catch up on any payments that you are behind and most lenders will stop attempting to repossess the vehicle. You can also negotiate with lenders and attempt to agree to lower payments or a different interest rate that will allow you to continue driving the vehicle. Finally, you can agree to redeem the car by buying it back in the bankruptcy process for its fair market value, something that must be signed off on by the court.


If you find yourself needing the services of a Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC today at (704) 370-2828. As professionals who are experienced in the bankruptcy arena, our attorneys will provide you with the best advice for your particular situation.


About The Author: 

Bryan 1  Bryan Stone is a Partner with Arnold & Smith, PLLC where he focuses his practice on all aspects of bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord tenant issues.  Originally from Macon Georgia, Mr. Stone attended the University of Georgia for a BBA in Banking and Finance and went on to Wake Forest to earn his law degree.  After law school Mr. Stone relocated to Charlotte where he has become quite involved in many local organizations.  He is currently the Chair of “Bravo!” the young professionals organization of Opera Carolina, he also founded the UGA Alumni Association of Charlotte.  In his spare time he enjoys perfecting his BBQ skills for the annual “Q-City BBQ Championships” and playing softball with the Mecklenburg County Bar Softball League.

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