Bankruptcy Can Prevent Repossession of Your Car
If you’ve defaulted on your auto loan, your lender can legally take your vehicle away from you at any time you remain in default. This means that you can be in for a rude awakening when you intend to go somewhere, only to discover your car is gone. Repossession agents are quick, so you may never even notice they were there.
Suddenly losing your vehicle can present a major disruption to your life. You may find yourself unable to go to work, take your kids to school, go to the doctor, and accomplish other essential chores. Unfortunately, your auto loan lender is unlikely to sympathize with these struggles, but you can prevent them from happening by filing for bankruptcy.
Repossession & Bankruptcy’s Automatic Stay
When you file for bankruptcy, the judge will issue an order commonly referred to as an automatic stay. This order stops all collection actions your creditors could otherwise use to pursue to collect debt – even repossession. For as long as it takes your bankruptcy case to settle, you don’t have to worry about your lender repossessing your vehicle.
That said, you can still lose your vehicle at the end of your bankruptcy case if you were behind on your auto loan payments. Although the automatic stay can give you valuable time to prepare for the near future, it may not be able to help you keep your vehicle when you’ve defaulted on your loan.
Alternatives to Bankruptcy
Although bankruptcy can help you resolve your problems with debt, you may not wish to pursue it when you’re only concerned about vehicle repossession. In that case, you can pursue alternative options to avoid repossession.
Pay Late Payments As Soon As Possible
Missing one payment defaults your auto loan, but you can avoid repossession if you make a late payment (with all applicable fees and fines) before your lender notifies you of the default.
Reinstate Your Auto Loan
If you’ve defaulted on your auto loan, you may be able to reinstate it if you can make up for all past-due payments in a lump sum. If you can reprioritize your finances or experience a windfall of cash, this can be an effective option to cure the default and keep your vehicle.
Negotiate with Your Lender
If you anticipate financial hardship that would prevent you from paying your auto loan, you should inform your lender as soon as possible. Allowing your auto loan to default without warning can give your lender a bad impression of you as a borrower.
Although there’s no guarantee of avoiding repossession after you default on your loan, giving your lender advance notice of financial hardship can demonstrate that you care about your financial obligations. A flexible lender may be willing to waive the deficiency on your loan if you surrender your vehicle, while others may work with you to modify the loan.
Even if you lose your vehicle in the end, negotiating with your lender can protect you from liability for auto loan payments you were already unable to make due to financial hardship.
Explore Your Options with Legal Assistance
If you are struggling with debt and wish to avoid repossession, Buchalter & Pelphrey Attorneys At Law can help. Not only can we assist you with bankruptcy to prevent repossession, but we can help you engage with your lender to explore alternative options.
Learn more about what may be possible for your legal situation. Contact us online today to request a free case review.