When a borrower falls behind on a car note, the bank can repossess the car wherever they can find it. They can not break the peace, enter a locked facility, or otherwise break the law, but they can get it from the street, a public parking lot or any other accessible spot. Once the car is repossessed, you have a short period of time to come up with enough money to get the car back or it will be sold at auction. Often the price at auction is much less than the blue book value. You will be responsible for the balance of the loan if the sale does not pay it off. This balance due after the sale is knows as an automobile loan deficiency.
A car deficiency is a dischargeable debt. The repossession will show up on your credit report, as well as the deficiency and any law suit filed to recover the deficiency. If you have co-signed for a loan for someone else, you may be responsible for a deficiency if the loan goes into default and the car is repossessed.
A bankruptcy can stop the repossession before it happens. A Chapter 7 will only stop the repossession temporarily. A car finance company can ask the court for permission to take the car within a month of filing the case.
A Chapter 13 can provide a plan to pay off the car loan over time. In a Chapter 13, you do not have to come up with the default to save the car from repossession. You have five years to pay off the balance of the loan.
Car leases are not as easy to cure in a bankruptcy. A repossession under a car lease will be stopped by the filing of a bankruptcy but, because of difficulties determining fees due at the end of a lease, normally you can not include it in a Chapter 13.
Contact the trusted bankruptcy lawyers in Tacoma, Washington for more information about repossessions and bankruptcy options.