Vehicle repossessions during bankruptcy in Edison involve complex legal processes with specific rules and deadlines. Our team at Gillman Capone can activate an automatic stay, which temporarily stops creditors from pursuing debt collection, including vehicle repossessions.
A skilled bankruptcy attorney from our firm can guide you through options like reaffirming the loan, redeeming the vehicle, or including the car in a Chapter 13 repayment plan. Without a lawyer, you risk losing your vehicle and making costly mistakes with the paperwork.
If you file for a Chapter 13 bankruptcy, an automatic stay is put in place by the bankruptcy court. This stay immediately prevents creditors from repossessing your vehicle during a bankruptcy in Edison. If your vehicle was already repossessed, filing Chapter 13 may allow for its return. The court can order the lender to turn over the car, although this is not always automatic and it is vital to act quickly before the lender potentially auctions the vehicle.
In the Chapter 13 plan, you can propose a way to pay off the missed car payments (arrears) and continue with future payments over a period of three to five years. The debtor makes regular payments to a bankruptcy trustee, who then distributes the funds to the creditors according to the confirmed plan. If you have a car loan that is worth more than the car itself, Chapter 13 allows for a “cramdown”. This restructures the loan to match the car’s current market value.
The remaining balance is converted into unsecured debt, which is a lower priority in the repayment plan. This can lower both the total amount owed and the monthly payment. This is different for leased vehicles, where you must promptly cure arrears and continue making payments directly to the lender.
To keep the lender from seeking to lift the automatic stay, you may need to make adequate protection payments between filing and confirmation of your plan. These payments are typically the same as your regular car payments and are made before your repayment plan is confirmed, as they are meant to compensate the lender for the value of the collateral while it is being used.
If you file for a Chapter 7 bankruptcy, your vehicle repossession options will look a bit different although the filing triggers an automatic stay like in a Chapter 13. Chapter 7 does not have a built-in mechanism to catch up on missed payments.
To keep the vehicle, your options are redemption (paying the vehicle’s fair market value in a lump sum), reaffirmation (signing a new contract to continue making payments), or using your state’s motor vehicle exemption if you have sufficient equity. If your vehicle has been recently repossessed but not yet sold by the lender, a Chapter 13 filing is more effective at forcing the lender to return it.
To prevent or reverse a vehicle repossession, you must file for bankruptcy in Edison before the lender sells your vehicle at auction. This means you should consult with a qualified attorney as soon as possible to understand your options.
If you do not take action, such as reaffirming the debt or including it in a Chapter 13 plan, the automatic stay will eventually be lifted, allowing the lender to repossess the vehicle legally. For those facing imminent repossession, quick action is critical. Waiting too long, especially if the car is repossessed and sold, can make it too late to recover it.
For both Chapter 7 and Chapter 13, filing for bankruptcy immediately after repossession can be crucial for reclaiming the vehicle, as debtors retain redemption rights until the car is sold. A skilled bankruptcy attorney from our firm can provide guidance on the best course of action based on your specific financial circumstances and local laws.
Given the complexity of bankruptcy law and the nuances involved in vehicle repossessions during bankruptcy in Edison, you should speak with an attorney who can protect your interests and help you understand your legal rights. The legal team at Gillman Capone can manage all communication with your creditors, ensure they abide by bankruptcy laws, and prevent them from harassing you while your case is pending. Contact us today to request your free case evaluation.
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