Can Bankruptcy Stop the Repossession of My Car?

 Posted on November 23,2022 in Bankruptcy

While there are a number of reasons why people consider bankruptcy, they usually involve large debts and financial difficulties that affect a person's ability to meet their financial obligations. Unfortunately, the non-payment of debts can lead to additional difficulties, such as a potential repossession of a vehicle if a person is unable to make payments on an auto loan. If you are struggling to make your car payments, you may be wondering if bankruptcy can help you keep your car. Your ability to avoid a repossession or recover a vehicle that has been repossessed will depend on several factors, including the type of bankruptcy you file, the value of your car, and the amount you owe.

Can Bankruptcy Prevent a Repossession?

There are two different types of bankruptcy, and it is important to understand repossessions and vehicle loans will be treated in each of these options. In a Chapter 7 bankruptcy, also known as a liquidation bankruptcy, some of your assets may be sold off to repay your creditors, and your debts may then be discharged. In a Chapter 13 bankruptcy, also known as a reorganization bankruptcy, you create a repayment plan to repay your creditors over time. This repayment plan will last for several years, and once it is completed, the unsecured debts that still remain will be discharged.

If you file for Chapter 7 bankruptcy, the repossession process will be put on hold while your case is pending. Texas law allows one vehicle to be exempt from liquidation during bankruptcy for every member of your family with a driver's license. However, if you still owe money on your auto loan, defaulting on that loan or discharging it during bankruptcy will result in the lender repossessing your car. If you want to keep your car, you will most likely need to reaffirm the debt with the creditor, which means that you agree to continue making payments on the loan. If you do not have the financial resources to make up any missed payments, you may be unable to keep the vehicle.

If you file for Chapter 13 bankruptcy, you may be able to stop the repossession of your car and even get your car back if it has already been repossessed. Through your Chapter 13 repayment plan, you may make up the missed payments on your loan and continue making payments in the future. In addition, you may also be able to have the amount of the loan reduced through a process known as a "cramdown," which will be available if the total amount you owe is more than the car's actual value. 

Contact Our Fort Worth Vehicle Repossession Defense Attorneys

If you are concerned about the repossession of your car, or if your vehicle has already been repossessed, it is important to understand how bankruptcy may help address these issues. At Acker Warren P.C., our Arlington bankruptcy lawyers can help you act quickly to prevent a repossession or recover a repossessed vehicle, and we will make sure you take the right steps to address your debts and receive financial relief. To set up a free consultation and get the debt relief you need, contact us at 817-752-9033.

Source:

https://statutes.capitol.texas.gov/Docs/PR/htm/PR.41.htm