Can Bankruptcy Help Stop Repossession? Bankruptcy and Auto Repossession
Bankruptcy is designed to protect individuals or businesses that are unable to meet their financial obligations — and provide protection to involved creditors as well. While bankruptcy is a serious procedure and should only be considered if absolutely necessary, sometimes it is the best solution for those suffering severe financial hardship. And, for some, it may be the only solution.
One area that bankruptcy can be particularly helpful in alleviating financial hardship is by protecting property that may be in danger of repossession. This is when creditors take back goods that buyers are failing to make timely loan payments on. Some loans are secured — meaning the buyer has put down some form of collateral, often the item being purchased — while some are unsecured — typically credit cards. If you default on an unsecured loan, the only option creditors have when collection attempts have failed is to sue. But with a secured loan, creditors can repossess the collateral and sell it. Of course, if that doesn’t provide sufficient funds to wipe out the loan, they can then sue you for the remainder of the loan balance.
Bankruptcy Can Stop the Repossession Process
Bankruptcy can sometimes help cancel the debt, or even allow you to stop the repossession process. After filing a bankruptcy petition in bankruptcy court, all creditors are prevented from making any further collection attempts. This is also known as an “Automatic Stay”, which is an automatic order from the bankruptcy court issued upon the filing of a bankruptcy petition to all creditors. This applies to creditors attempting to repossess collateral such as automobiles.
Filing a Chapter 7 Bankruptcy to Stop Repossession
If you file for Chapter 7 bankruptcy in order to stop repossession, you’ll have to make arrangements with the creditor to bring all payments current after filing for bankruptcy. If you want to keep the car after bankruptcy, you’ll need to sign a reaffirmation agreement and make all payments after the bankruptcy.
Filing a Chapter 13 Bankruptcy to Stop Repossession
In a Chapter 13 bankruptcy , the repossession will be stopped and the debtor gains the chance to repay the value of the car to the creditor through the chapter 13 plan. Chapter 13 is beneficial to debtors owing more on a car than what it is worth, since chapter 13 payment plans can lower car payments on car loans where the debtor owes more than the car is worth.
If you’re thinking about filing for bankruptcy in order to stop repossession in you should seek out an experienced Dallas bankruptcy attorney in order to find out which option will work the best in your particular situation.
Have Questions About Auto Repossession and Bankruptcy?
If you have any questions regarding repossessions and bankruptcy don’t hesitate to ask, simply give us a call or fill out our contact form to set up a free consultation.
Car Repossession and Bankruptcy
Bankruptcy Can Stop Car Repossession
Anyone who has suffered car repossession knows that is can happen quickly. Even if a debtor is only a few weeks behind on their car payment, repossession can take place fast and without warning. Most people who suffer car repossession have been having financial trouble for some time; but unfortunately they chose to not contact the lender or a bankruptcy attorney to find a solution. You do not need to lose your car to repossession.
Here’s what you need to know:
Some Lenders are Willing to Temporarily Lower or Defer Your Car Payment
But they won’t offer such a deal if you don’t call them. If you feel that you are going to miss a payment, don’t delay, call you lender now and see if they can reduce or defer your payment temporarily.
When a debtor files bankruptcy the “automatic stay” will stop all collections activities against you. But once discharged out of Chapter 7 bankruptcy or in the repayment phase of Chapter 13 bankruptcy you will still need to make payments on your car if you want to keep it. Alternatively, you can do a voluntary repossession during bankruptcy. The lender will auction the vehicle and the balance on your loan may be discharged in Chapter 7 bankruptcy. In Chapter 13 bankruptcy you can repay your car loan (plus any late payments) through the repayment plan.
If a Lender Repossesses Your Car Outside of Bankruptcy
If a lender repossesses your car outside of bankruptcy and auctions it off for less than what you owe, they could come after you for the balance. Even at this point you can file bankruptcy and discharge the deficiency balance in a Chapter 7 bankruptcy.
Have Questions About Car Repossession and Bankruptcy?
Five Ways To Avoid Vehicle Repossession
Ways To Stop Vehicle Repossession
Refinance You Car Loan
If you are worried about vehicle repossession because you recently lost your job or experienced a salary cut and your credit score is still good, you may be able to refinance your vehicle and get a lower monthly payment.
Ask For A Car Loan Modification
If you can see that you’re having trouble paying your car loan avoid a future repossession by asking for a modification of your car loan before you fall behind on payments. For example, if you have a car loan with 24 months remaining to pay, ask your lender if you can extend the term to 30 or more months. This can reduce your monthly payment significantly and help you avoid repossession.
Ask For A Deferment
If you are falling behind on your car loan payments and fear repossession, consider asking your lender if you can skip one payment. Some lenders may be in agreement and tack the deferred payment onto the end of your car loan’s term. Therefore if you had 30 months to pay back a car loan, the deferment would make the new repayment time 31 months.
Request A Late Charge Waiver
If you’re behind on your car loan payments by a few months, those late charges can really add up. As a matter of fact, if you fail to pay the late charges, the lender has the right to repossess your vehicle. However, the truth is that most lenders do not want to repossess your vehicle and would prefer to work out a compromise. If you can prove that waiving or reducing the late fees will help you get bring your car loan payments current, many lenders may be willing to waive or at least reduce those charges.
If you’re significantly behind on your car payments and other bills, filing bankruptcy may be your best way to avoid repossession. Both Chapter 7 bankruptcy and Chapter 13 bankruptcy offer viable options for debtors who want to keep their car.
Repossession and Your Personal Property
As many Texans suffer job losses or salary reductions, many are facing vehicle repossessions. Facing a repossession can be upsetting and disruptive under any circumstance; but especially if the vehicle is repossessed while your personal property is still in it.
Creditors Do Not Have the Right to Keep or Sell Your Personal Property
The first thing car owners need to know is that creditors do not have the right to keep or sell your personal property that is found in a repossessed vehicle. They must also take reasonable care to prevent someone else from taking your personal items left in a repossessed vehicle. That said here’s the reality car owners are facing.
Reality Check #1 – Although the law allows you to claim your personal property from a repossessed vehicle, the logistics or doing so may be a bit more challenging. For example, if you have left something truly valuable in your repossessed vehicle, such as cash, jewelry or even electronics such as an iPod, how do you prove that you actually left them in the car?
Reality Check #2 – Although the law requires that the creditor take reasonable care to prevent others from taking your property, what does that really mean? This rule is too vague to count on to protect your property when facing repossession.
Car owners facing repossession should not wait for the repo man to show up at their door or driveway. Be proactive in handling any pending repossession. Many lenders are willing to negotiate with delinquent borrowers and bankruptcy offers the opportunity to keep your car by making reasonable payments over a period of time. Explore all of your options, including bankruptcy before repossession strikes you.
When Facing Repossession Your Best Weapons Are Fast Action And Bankruptcy
Anyone with a pulse knows that the economy is just simply crazy. One minute you have a stable job of 20 years and the next thing you know you’re jobless. With layoffs increasing and credit decreasing many ordinary people are finding that they just can’t make the payments on their vehicles, even if it’s as little as $200 a month. Because of this, repossessions in Dallas-Fort Worth are climbing at an alarming rate. Even the car loan companies can’t keep up with the pace. According to an article in The San Antonio News, there are more repossessions now than they have been in the past 20 years.
A repo man quoted in the article says that there are so many repossessions that he is now repossessing vehicles that are as much as four months behind in payments. Just a few years ago, being behind one or two months could get your car repossessed. But those delinquent car owners aren’t giving up their repossessed property quietly, many become violent. That’s a big mistake when facing repossession. Although Texas law gives property owners the right to use force to protect their property, those carrying out repossession are protected from violence. The best action a car owner can take when facing repossession is to file for Chapter 13 bankruptcy as soon as they know that they are unable to make payments. Don’t delay and don’t wait until after your vehicle has been repossessed to file for Chapter 13 bankruptcy, by then it’s probably too late.
How Should Debtors Handle Repossessions When Considering Bankruptcy?
If you’re behind on your car payments you have probably considered filing bankruptcy. The only problem is that if your car is repossessed and sold at auction before you file your bankruptcy, there is no way of getting it back. So what should a debtor do if they are facing repossession while they are still considering bankruptcy?
Let’s take a look at a few tips:
- The first thing a debtor considering bankruptcy should do if facing repossession, is contact their vehicle finance lender by phone and letter. Try to see if they are willing to give you a reprieve of another 30 days or more while you sort out your financial issues. You don’t need to announce that you are considering bankruptcy, just simply tell them that you need more time. Remember, most vehicle loan companies don’t want to use repossession if they don’t have to.
- Keep your vehicle in a closed and locked garage, at least until you can file bankruptcy. In the state of Texas, the repo-man does not have the right to forcibly break into your house (and your garage is part of your house) or enter a closed gate when trying to repossess a vehicle. Furthermore, they cannot forcibly remove you from your vehicle. On the note of using force, DO NOT ever attempt to physically or even verbally stop a repossession agent from doing their job, doing so could get you hurt or put in jail.
- If repossession of your vehicle is imminent, contact a Dallas bankruptcy attorney immediately so that they can file your bankruptcy fast. Sometimes a bankruptcy attorney can file what’s called an “emergency bankruptcy” if the circumstances call for such action.
Can Bankruptcy Help Get My Vehicle Back After Repossession?
Filing Bankruptcy After Repossession
Bankruptcy is known for helping people stop vehicle repossession when they file before the lender attempts to take the property. But what happens if the repossession has taken place before your petition was filed? Can you get it back? There is a possibility you can get your vehicle returned to you after beginning the filing process, yet under certain circumstances.
If you fall behind on vehicle payments you may be able to file Chapter 13 bankruptcy to help get current. Yet, in a situation in which the vehicle was repossessed before you filed for protection, you may be able to file a motion for turnover. This is a court issued order for the lender to return the vehicle to you. In this sense, your vehicle needs to be a necessity to your household. In other words, if it is needed to help you get to and from work so you can earn income to make payments, you may want to review whether filing the motion is an option.
In some cases, once the vehicle has been taken by the lender, the debtor questions whether they should consider trying to get it back. You may need to set up a payment agreement with the lender and have it approved by the court, likely setting up a repayment schedule for Chapter 13. It is also possible a motion may not be needed to be filed for the car to be returned to you if the lender learns about your bankruptcy. Plus, some debtors decide not to get their vehicle back; after obtaining a discharge it may be easier to get a different vehicle with a better monthly payment. Discuss your situation with your bankruptcy attorney.
Rebuilding Credit After Repossession
Over the last couple of weeks, almost every news channel featured the new cash for clunkers program explaining the details of the program incentive. The hope was the program would stimulate new cars sales and reduce the number of gas guzzlers on the road. Now the headlines are different. Almost as quickly as it came, Congress is having second thoughts and is considering suspension of the program. According to a CBS 11 news update, the new program may already be gone because of funding concerns. The article said: “No one knows for sure how much money is left in the program, because the government website that’s handling the program is bogged down with the huge number of submissions it’s getting.” Around 10,000 cars have been sold under this program in the Dallas Fort-Worth area since the program started last week.
Regardless of the commentary on Congress underfunding another program, there are some additional things to remember from this experience. The first is that this program, just like any other, can lure consumers that weren’t looking to originally purchase a vehicle. Many people end up in financial distress because of lack of planning. Jeff Bartlett, deputy online auto editor for ConsumerReports.org, provides sound advice when you are considering a new car purchase.
His suggestions include:
1. “Don’t be swayed by all the incentives. Focus on finding the best car for your needs, one that’s safe, reliable and has low owner costs. Then look to the incentives, because there are deals to be had from almost every company.”
2. “Make sure you shop around for financing and go into the dealership knowing you are pre-qualified for a reasonable loan. They’ll be able to tell you right away if the dealer can beat or match that.”
If you have already gone through bankruptcy, one of the best ways to rebuild your credit is to make good financial decisions going forward. The Cash for Clunkers program came with lots of promise and bells and whistles. It probably helped many people get a new car that needed one. However, it also had the effect of luring people that weren’t planning a purchase into the car lots. When you’re looking to rebuild, resist the lure and do your research before you decide to buy. You may end up with an additional monthly expense at a time when you don’t need one. Also consider the collateral expenses. If your old car was paid for and you utilized an incentive like the Cash For Clunkers to get better financing, you may still end up in a worse situation because of higher insurance premiums for financed vehicles.
The second major lesson out of the Cash for Clunker experience is know what things are going to cost you, especially when you are rebuilding credit. Whether it’s this program or the latest add for digital TV service, understand and know the cost before you sign. Just like the federal government, many consumers jump into new financial obligations without assessing the full cost of the program. Also consider whether you’re jumping in because you need the new expense, or whether you’ve simply been tempting by creative advertising.
Bankruptcy is a valuable tool in your financial recovery especially if you are trying to stop repossession. However, it is just the first step. Don’t squander your financial strides with impulse purchases. Instead, continue your efforts by making plans for financial success.
Post-Bankruptcy Survival: Facing Car Repossession?
If you’re a few years out of bankruptcy and facing financial difficulties again, it can be disheartening. For debtors who reaffirmed a car loan or took on a new car loan after their bankruptcy discharge, unemployment, underemployed or a medical crisis can bring on a slew of issues including vehicle repossession. So how do you cope when you’re facing car repossession and you don’t have the option to file bankruptcy again?
Below are a few tips:
- The first thing a post-bankruptcy debtor should do is face the fact that they are having issues early. If you’ve been keeping a budget, then you will be able to see problems before they arise. If you just lost your job or received a pay cut then you know that you may have issues paying your car note. Don’t ignore that reality.
- Contact the lender and find out if they can modify the loan or somehow give you a little more time to earn more money so that you can pay the car note. What post-bankruptcy debtors don’t want to do is ignore the lender and then start paying late or skipping payments. The lender will either say yes or no, so don’t be afraid to at least ask.
- If you are unable to get concessions from your lender, consider selling the vehicle. You’ll get a lot more money if you sell it yourself then if they sell it after repossession. But whatever you do make sure that you sell the vehicle for enough money to cover the outstanding loan balance.
- If you are unable to sell your vehicle or if the lender has already repossessed the car, you need to find out if you will owe a balance. Even after the lender sells the car at auction there could still be an outstanding balance on the loan which they will expect you to pay. Under normal circumstances you would be able to discharge this balance in bankruptcy; but if you recently exited bankruptcy that won’t be an option.
- If you owe a balance and are unable to file bankruptcy, try to work out a payment arrangement with your lender so that you can repay the balance and avoid future lawsuits and garnishments.
Chapter 11 Bankruptcy News: Why The Spike in Homeowner Repossessions?
Ever since the “official” start of the recession in December 2007, homeowner foreclosures and Chapter 11 bankruptcy filings have been skyrocketing across the United States and around the world – with no signs of slowing down. In fact, recent statistics released by the Council of Mortgage Lenders in the UK revealed that foreclosures could increase by up to 200 per day, which is certainly not a number to sneeze at. And as we’ve learned from the Great Recession, what happens in Europe tends to happen here – and high-income earners are often the first to be hit, thus resulting in increased Chapter 11 bankruptcy petitions.
Can Filing Chapter 11 Help When Facing Repossession?
With many experts claiming that the worse is yet to come in regards to the housing industry, many homeowners are left scratching their heads: why are homeowner repossessions drastically spiking, and can filing for a Chapter 11 bankruptcy help in the face of repossession?
Financial experts agree that the tremendous rise in homeowner repossessions is due in large part to the tightening hold of the credit crunch. As the risk of a double-dip recession looks like a certainty, many businesses are forced to cut staff in order to make ends meet – which means that many consumers have now found themselves out of a job. Additionally, many high-income earners who still have a job are finding their budgets tightening while their variable mortgage payments are rising – a classic scenario caused by the confident housing market of the 90s. These factors all contribute to the spike in homeowner repossessions and Chapter 11 bankruptcy petitions.
Yet if you’re being faced with a looming repossession, you don’t have to resign yourself to losing your home. In fact, many lenders are willing to work with their clients in order to help them keep their houses. For example, a popular move enacted by mortgage lenders includes giving a repayment vacation, where a consumer doesn’t have to pay for a month in order to get his or her finances back on track. Additionally, lenders can set up new payment plans that can go a long way towards making monthly payments more manageable. This is often one of the main benefits of filing for Chapter 11 bankruptcy, as you’re given a payment plan that allows your creditors to collect on what they’re owed. After all, lenders certainly don’t want to lose their money by repossessing your home.
Call us today for a free bankruptcy consultation
If you’re faced with repossession, make sure you exhaust every outlet. Lenders and banks are typically lenient when it comes to what they’re willing to do to make sure that you keep your home. If you still have trouble making payments after negotiating with your lender, turn to bankruptcy courts by filing for a Chapter 11 bankruptcy. It may just be the last move you have left to save your finances – including that of your home.
Are We Heading for a Car Repossession Crisis?
According to an article in the Star-Telegram, we may be heading for a car financing crisis with many car buyers unable to find financing for a new/used car or unable to pay off existing car loans and/or facing car repossession.
What the Article Said
Some 3.25 percent of all indirect auto loans were at least 30 days overdue in the third quarter, the American Bankers Association reports. That’s the worst showing since the group began compiling such numbers in 1980. Indirect loans are those arranged by a third party, typically an auto dealer, and they account for 90 percent of all car loans.
Many consumers are receiving car loans from the subprime market which are very costly with high interest rates. Currently, the number of repossessions on cars financed with these types of loans is skyrocketing as more consumers face job losses and foreclosures. There was a recent report about how Repo men were finding it difficult to make a living because those facing repossessions are fighting harder to hold on to their cars by hiding them. If the trends continue in their current direction we may see a crisis in the car industry similar to real estate with more Americans facing repossession of their vehicles.
Contact an Attorney to Learn More About Your Options
Unless you live in New York or another city with highly developed transportation systems, having a car is an essential life tool. Without a car many Americans cannot make the often long commutes to their jobs. Fortunately, using bankruptcy, a debtor may be able to keep their car if they need it to get to work. If you are facing a repossession or you suspect that you won’t be able to continue to pay for you car loan, contact a bankruptcy attorney today to find out your bankruptcy options.
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Car Owners Attempt to Avoid Repossession by Destroying Their Cars
According to an article in the Star-Telegram, many desperate car owners facing financial problems and possible repossession are secretly destroying their vehicles and filing false insurance claims.
The article said:
…financially strapped car owners are torching, sinking or ditching their vehicles and then reporting them stolen to cash in on the insurance. SUVs have been found ablaze in the Nevada desert, cars have been dumped in a Miami canal and a BMW was discovered buried in a field in Texas. Some vehicles have been parked in the path of a hurricane.
Many car owners who are completely overwhelmed with pending foreclosures, delinquent credit cards and possible repossession, falsely believe that by secretly destroying their car and reporting it stolen is an easy way out of repossession and other financial troubles. That couldn’t be further from the truth. If a car owner files a false insurance claim, he/she could face felony charges of insurance fraud, making false statements to police and insurance providers. That means a possible prison term and an order to pay restitution. And just in case you’re wondering, that restitution order would not be dischargeable in bankruptcy.
It’s sad to see car owners going to such desperate measures to avoid repossession when bankruptcy offers an easier and legal solution. Dallas-Fort Worth residents facing repossession may be able to save their vehicle by filing bankruptcy. To find out how you can stop repossession of your vehicle using bankruptcy, contact a Dallas-Fort Worth bankruptcy attorney today.
Huge Spike in Home Repossessions During Lingering Foreclosure Crisis
While the rate of new foreclosures may be returning to normal, the damage caused by the past decade’s housing disaster is still lingering. According to RealtyTrac, a foreclosure analytics and sales company, bank repossessions have jumped 66 percent over the rate from this same time last year – the largest rise the company has ever recorded. In the space of just three months, over 123,000 homes were repossessed.
In some states, foreclosure activity can take time to complete – more than three years in states like New Jersey and New York, for example. Banks in these states have finally been able work through their backlogs, and are now moving forward with record numbers of foreclosures. Currently, New Jersey has the nation’s top foreclosure rate (1:451).
Texas is also seeing an increase in foreclosure activity. In Texas, one in every 1687 homes forecloses. In Galveston County alone, the rate of foreclosure is one in 786.
Facing Foreclosure in Dallas/Fort Worth?
The fear of losing one’s home is one of the most distressing situations a person can face. If you are struggling to make your monthly mortgage payments, we want you to know that you have options. A Dallas bankruptcy attorney at Allmand Law Firm, PLLC can offer you a
FREE financial empowerment session to discuss your unique situation and come up with personalized solutions.
Foreclosure doesn’t happen overnight – if you have missed several payments, and have not had success with other methods to avoid foreclosure, then bankruptcy may be the best option for you. Chapter 7 bankruptcy can delay foreclosure, while a Chapter 13 filing may even help you save your home. Work with a lawyer at Allmand Law Firm, PLLC to find out which option will work in your best interests.
Our goal is to help good people through bad times. We encourage you to get in touch with our firm today at (214) 884-4020.
When Repossessions Become Deadly: How To Avoid The Violence
According to an article in the Star-Telegram, a 67-year-old railroad retiree is dead after confronting a repo man attempting to tow away his vehicle at 2:30 in the morning.
The article said:
Alone in his mobile home off a winding dirt road, Jimmy Tanks heard a commotion at 2:30 a.m. just outside his bedroom window: Somebody was messing with his car.
The 67-year-old railroad retiree grabbed a gun, walked out the back door and confronted not a thief but a repo man and two helpers trying to tow off the Chrysler Sebring. Shots were fired, and Tanks wound up dead, a bullet in his chest. The man who came to repossess the car, Kenneth Alvin Smith, is awaiting trial on a murder charge in a state considered a Wild West territory even by the standards of an industry that’s largely unregulated nationally. This story is an unnecessary tragedy.
Let’s discuss some ground rules for dealing with repossessions:
- Never confront the repo man especially with a gun or other weapon.
- If you know that your vehicle payments are delinquent, be mentally prepared to face repossession eventually especially if you haven’t taken actions such as filing bankruptcy to stop repossession.
- If your vehicle is in jeopardy of being repossessed, speak with a bankruptcy attorney to find out how you can stop the repossession and save your vehicle using bankruptcy.
- Never jeopardize your life or the lives of others for a vehicle or any other type of property being repossessed.
As the economy worsens not only are people facing job losses, repossessions and foreclosures, they are facing anger which is making matters related to money literally dangerous and life threatening. It is important for those facing financial crisis to consider all of their options, including bankruptcy BEFORE their property is repossessed or foreclosed on. But whatever you do please DO NOT physically confront those who are repossessing your property, at best you can end up in jail and at worse — dead.
Rich Lose Their Jets To Repossession
The economy isn’t getting better as many have guessed by now, but the pain does seem to be spreading to even the wealthiest among us. Many repossession agents are reporting that the retaking of private planes has increased dramatically as many wealthy individuals run out of cash needed to maintain and operate them. Some of the jets, worth more than $20 million are in poor shape after sitting idle for months. The owners of these airplanes facing repossession include corporations and affluent individuals who have fallen on hard times and have decided to put their jets on the back burner to deal with more pressing financial issues. And many lenders and repo-men specializing in the repossession of private plans say that their business is set to increase in volume this year.
“The small, single-engine Cessnas and Pipers are being repossessed all the way on up to 747s,” says Terence Haglund, founder of the Aviation Law Center, who represents many lenders. “It’s definitely recession-related, and it’s been increasing for the last couple of years.”
But unfortunately for the lenders hoping to repossesses the private plane and auction it off to make back some of the defaulted loan, many of the planes are worth only a fraction of what the owners paid for them originally. In what seems to be aviation’s own upside-down lending crisis, many of the jets and small airplanes have lost significant value since the recession began. And to top it off, there aren’t many lenders willing to grant many a loan to finance an airplane.