Car Repossession and Bankruptcy

January 13th, 2010 by Reed Allmand


Anyone who has suffered car repossession knows that is can happen quickly.  Even if a debtor is only a few weeks behind on their car payment, repossession can take place fast and without warning.  Most people who suffer car repossession have been having financial trouble for some time; but unfortunately they chose to not contact the lender or a bankruptcy attorney to find a solution.  You do no need to lose your car to repossession.  Here’s what you need to know:

  1. Some lenders are willing to temporarily lower or defer your car payment to help you avoid repossession. But they won’t offer such a deal if you don’t call them.  If you feel that you are going to miss a payment, don’t delay, call you lender now and see if they can reduce or defer your payment temporarily.
  2. Bankruptcy can stop car repossession.  When a debtor files bankruptcy the “automatic stay” will stop all collections activities against you. But once discharged out of Chapter 7 bankruptcy or in the repayment phase of Chapter 13 bankruptcy you will still need to make payments on your car if you want to keep it.  Alternatively, you can do a voluntary repossession during bankruptcy. The lender will auction the vehicle and the balance on your loan may be discharged in Chapter 7 bankruptcy.  In Chapter 13 bankruptcy you can repay your car loan (plus any late payments) through the repayment plan.
  3. If a lender repossesses your car outside of bankruptcy and auctions it off for less than what you owe, they could come after you for the balance.  Even at this point you can file bankruptcy and discharge the deficiency balance in a Chapter 7 bankruptcy.


About Reed Allmand


Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."

View all posts by Reed Allmand


Subscribe to our e-mail newsletter to receive updates.


Why do I need to submit a new wage order when I modify my plan

When we modify your bankruptcy plan we are changing your plan payments. This means that we have to get with your employer and change the terms and amount of your wage order. The only way we can do that is by filling out a new wage order form.  

Learn More
What happens if the stay terminates on my home?

If the bankruptcy stay terminates on your home that means that even though your in bankruptcy, your creditor can pursue all there legal remedies they can pursue if you were not in bankruptcy. This includes foreclosure, and having your house sold and evicting you from your house.

Learn More

Find Location

  • Dallas Bankruptcy

    5646 Milton Street, Ste. 120 Dallas, Texas 75206
  • Fort Worth Bankruptcy

    860 Airport Freeway, Suite 401, Hurst, Texas 76054
  • More Locations

Meet Our Clients