If you fall behind on car payments, the finance company can repossess the car without court order. That means one day you could walk out of your home, work, a grocery store, or nearly anyplace else and find that your car is suddenly gone. Your car may be full of valuables, and you may be stranded. A bankruptcy keeps your car safe from repossession while you have a chance to reorganize your finances.
The second you file a bankruptcy case, the automatic stay protects you from all creditors, including car finance companies. A Chapter 13 plan gives you a long-term solution by consolidating the car loan with other debt and giving you a chance to lower payments. A Chapter 7 offers a shorter term solution but stops repossessions nonetheless.
Either kind of bankruptcy eliminates the worry of your car being repossessed. It takes a car company a couple months or longer before it takes the drastic solution of repossessing your car. You should have some idea that your car is in trouble, though it is often a shock when the car is suddenly taken from you. It’s a good idea to prepare for filing bankruptcy and avoid stress, but if you find yourself worrying about repossession, you can stop the threat immediately with bankruptcy. If you are preparing for bankruptcy and need a little time, it may be a good idea to keep the car in a locked garage because creditors cannot disturb the peace when taking a car back.
If your car is repossessed before you file, a Chapter 13 repayment plan may be used to get the car back. You have to show that the car is necessary for your effective reorganization, which is usually easy to do since cars are so important to your financial security. There’s a chance you can get the car back with a Chapter 7, but that is a long shot. Once the car is sold at auction, the car is no longer yours, and bankruptcy won’t help, though any “loan deficiency” left after the car is sold is can be totally wiped out in a bankruptcy.
Overall, it is much better to plan things out before the car is repossessed. If you were not able to plan or a little too optimistic and you suddenly find yourself in serious trouble, a bankruptcy can still help.
As for household goods such as appliances, electronics or furniture, finance companies cannot just come into your house to repossess them. This requires a court order and a writ instructing the sheriff to take them back. That process is much too expensive for creditors to be worth taking back used furniture, etc. In these cases, they would usually rather sue you and garnish your wages.
To prevent your car's repossession and to get started on the path to financial freedom, contact the experienced Seattle, WA bankruptcy attorneys at the Law Offices of Jason S. Newcombe today.