A car loan is a legal contract between you and a creditor. If you fall behind in your payments on your car loan, your creditor has a legal right to repossess your car.
Most car loans specify the rights and obligations of the borrower and creditor, including the right to repossess a car without warning when loan payments are not received.
If you file for bankruptcy, an automatic stay will prevent your creditors from undertaking collection actions against you. This can delay the repossession of your car, if not prevent it altogether. Even if your car is repossessed, we still may be able to get your car returned.
If a car loan is defaulted on, creditor will try and recoup some of their losses. When this happens, creditors “repo” cars in order to resell them and recover a portion of the outstanding balance.
If the car is resold, you must be notified so you can potentially participate in the bidding process. Should a creditor decide to sell your car privately, they must give you an opportunity to pay off your loan and any storage fees or repossession charges added to your balance.
At Hedtke Law Firm, in Victorville, we will make sure that your rights are respected and that your car lender will not take advantage of you even after repossession. A Chapter 13 likely will reduce your car payments and allow you to keep your car.
When a car is sold for less than what is owed on it, a creditor may try to sue you for the difference. Suppose you owed $20,000 on a car that a creditor was only able to sell for $10,000. Here, a creditor can go to court and request a deficiency judgment in the amount of $10,000 — the difference between the $20,000 you owe and the $10,000 for which the creditor was able to sell the car.
In some cases, creditors fail to follow proper procedure or notification protocols. When this happens, you may have sufficient legal grounds to void a deficiency judgment. Hiring an attorney to represent you and investigate what happened may help get your case dismissed.
Under the terms of Chapter 7, depending on its value, your car can be sold in order to pay your creditors all or a portion of what you owe them. Under Chapter 13 bankruptcy, debt on a car loan can be included in your repayment plan. As a result, you stand a better chance of keeping your car under Chapter 13 bankruptcy.
In both cases, however, declaring bankruptcy will impose an automatic stay on any collection or repossession efforts on the part of creditors. Your recently repossessed vehicle will be returned to you within hours of filing a Chapter 13.
Talk to an auto repossession lawyer at the Hedtke Law Firm, to learn more about how we can help you. You can reach us directly at 909 736-3111.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.