You walk out of the house in the morning to go to work and your car is gone. Panic immediately sets in. Your first thought is that it must have been stolen. Then you remember that you are three months behind on car payments. Did the car really get repossessed? You call your car loan company and find out that it did. Now what happens?
The first question is, do you want the car back? If the answer is yes, some loan companies will allow you to pay the missed payments and get the car back. Other loan companies require that you pay the entire amount owed on the loan in order to have the car released.
What if you want the car back, but can’t afford to give the loan company a large, lump-sum of money? Most people don’t realize that a Chapter 13 bankruptcy can help them get a car back after it has been repossessed. As long as the Chapter 13 bankruptcy is filed before the car is sold at auction, you can get the car released upon submitting a Chapter 13 payment plan to the Bankruptcy Court that provides for monthly payments that will pay off the remaining balance on the car loan over a 3-5 year period.
If you decide that you don’t want the car back, the story doesn’t end once the car is repossessed. The car loan company will be adding fees for towing and storage to the amount owed on your loan. About a month after your car is repossessed, it will be sold at an auction. The auction sales price will be much lower than you could have sold the car for or even what you would have gotten if you traded in the car to a dealership. The sales price of the car will be applied to the amount owed. The vast majority of the time, the loan amount exceeds the sales price of the car.
What happens to the money that is still owed on the loan? You are still responsible for paying it! Yes, you can owe money on a car that you don’t even have anymore. The car loan company can call you, send you letters and even sue to you collect the money. If you owe money on a repossessed car, a bankruptcy can be a big help to you. Depending on what you qualify for, a Chapter 7 bankruptcy could help you have the debt forgiven or a Chapter 13 could help you get on an affordable payment plan to repay the debt.
If you’ve had a car repossessed, you still have options. A Chapter 13 bankruptcy can help you get the car back, and a Chapter 7 bankruptcy or a Chapter 13 bankruptcy can provide protection if you just want to walk away from the car. Give Steidl & Steinberg a call at 800-360-9392. Our experienced attorneys will be happy to schedule a free, in-person consultation for you and explain all of your options.