Can My Car Get Repossessed After Filing For Bankruptcy?

Getting Repo’d After You Filed Bankruptcy

If you’ve fallen behind on car loan payments, it’s common to worry about your vehicle getting repossessed . Debtors who file for bankruptcy protection often do so when they fall behind on paying bills or are struggling to make ends meet while trying to pay for necessities each month. So if you haven’t been able to make a payment on your vehicle, you may wonder if the creditor can take possession of the car after you have begun the filing process. Most likely, the bankruptcy will help you keep your car, but how you keep it may depend on which chapter you file.

The Automatic Stay

The automatic stay goes into effect when you file bankruptcy. It prohibits creditors from collection attempts and other legal actions such as repossessions. If you’ve fallen behind on paying your car loan you may need to get payments current.  Chapter 13 bankruptcy can help you pay off defaulted payments on the loan within 3 to 5 years.

Filing Chapter 7 Bankruptcy

If you file Chapter 7 bankruptcy , you may be able to work out a deal with the creditor while the stay is in effect. This means you will need to negotiate payment arrangements with the creditor that may include getting caught up on missed payments. Purchasing the car at fair market value may be something to consider if you can afford the option. In bankruptcy, some have been successful at obtaining affordable or reduced payments if the car is worth less than the total amount of the original loan.