Having your car repossessed can be a deeply traumatic experience. Repossession occurs when a borrower defaults on their loan or lease agreement, and the creditor decides to take back possession of the vehicle. If you are up against vehicle repossessions during bankruptcy, an attorney from our Madison office can carefully explain your legal options so you know how to best proceed.
When you have serious debt issues, and you have lost or you fear losing your vehicle, our trustworthy bankruptcy attorneys can explore the different types of bankruptcy cases and advise you about pursuing a fresh start. We can provide peace of mind during this challenging time and help you make the best decisions for your financial future.
Under New Jersey Law, creditors have the legal right to repossess a vehicle without going through the courts if the borrower does not abide by their payment obligation or defaults on other conditions in their lease agreement. The terms of your auto loan will determine if or when you are in default.
A default can occur if you miss a single payment, although many loans offer a grace period that provides a set time frame in which to pay before you are formally considered in default. Depending on the terms of your auto loan, you could be in default for missing a car payment.
A default can occur if you fail to uphold a state condition in your loan agreement, such as carrying sufficient auto insurance. A repossession agent can take your vehicle without notice or permission.
Filing for bankruptcy can halt vehicle repossession due to automatic stay provisions. After you file for bankruptcy, the court issues an automatic stay that legally bars creditors from undertaking collection actions. However, filing for bankruptcy will have a varying impact on vehicle repossession in Madison, depending on whether you file for a Chapter 7 bankruptcy or a Chapter 13 bankruptcy.
Filing for either a Chapter 7 or a Chapter 13 bankruptcy can temporarily delay vehicle repossession because of the automatic stay. If your car is repossessed before you file for bankruptcy, it may still be possible to get it back by filing for a Chapter 13 bankruptcy to compel the return of the vehicle. A creditor can seek relief from a Chapter 7 stay and move forward with the repossession if the borrower is unable to pay what is owed.
A Chapter 7 bankruptcy can allow you to discharge your car loan debt if you surrender the vehicle. In a Chapter 13 bankruptcy, you can enter into a repayment plan to catch up on missed payments and continue making regular car payments to keep your vehicle. However, delinquent borrowers will have several options under either a Chapter 7 or a Chapter 13 bankruptcy that can retain ownership of the vehicle.
If you file a Chapter 7 bankruptcy, you will need to outline your plans for the vehicle in your petition. If you do not wish to surrender your vehicle and discharge the debt, one option is to complete a reaffirmation agreement confirming your intention to pay the debt and keep making monthly payments. Another option is to pay a lump sum equivalent to the retail value of the vehicle to redeem your vehicle from the creditor.
For a Chapter 13 bankruptcy, you can propose a plan that enables you to cure your auto loan payment delinquency over a period of 36 to 60 months. Then, you would proceed to make your normal monthly payments for the vehicle. Another option can enable you to restructure your vehicle debt through what is known as a “cram down” if you signed your vehicle financing contract at least two and a half years before you filed for bankruptcy.
With a cram down, you can file for a Chapter 13 bankruptcy and propose to pay the creditor the current market price of the vehicle, plus interest, over the duration of your bankruptcy payment plan. Borrowers who choose this route will often end up significantly lowering their payment obligation over the life of their Chapter 13 repayment plan.
After a borrower files for bankruptcy, the bankruptcy court will issue an automatic stay, prohibiting creditors from collection actions. This would halt vehicle repossessions during bankruptcy in Madison. A skilled bankruptcy attorney can protect your rights and potentially help you get the vehicle back from the lender. Call us today to discuss your legal concerns during a free case evaluation.
Gillman Capone Law Group
N/a 