From commuting to work to picking up groceries to attending doctor appointments, your vehicle is an important part of your family’s everyday life. However, if you fall behind on your car payments, you may walk outside one day to find that your car has been repossessed by the lender.
The financial and emotional effects of car repossession can cause great stress to families, so if you have missed even just one payment, you need to act quickly. Here’s how a bankruptcy lawyer can work with you to help prevent car repossession.
Understanding the Car Repossession Process
When you finance a vehicle, you are agreeing for the lender to maintain a lien on your car until you fully pay off the loan. Falling behind on these payments gives the lender the right to take the car back. Once in their possession, the lender may choose to do one of the following:
- Keep the vehicle and continue trying to recover the cost of your loan either by themselves or with a third-party debt collector.
- Sell the car at auction and hold you responsible for paying the difference between the sale amount and what you still owe.
Things to remember about car repossession:
- The amount of payments you can miss before car repossession varies between lenders.
- In Georgia, lenders do not need to send a notice before repossessing a vehicle.
- Your vehicle cannot be taken by force (i.e. if you are in the vehicle or your vehicle is inside your garage).
Filing for Bankruptcy Halts Repossession
The moment you file for either Chapter 7 or Chapter 13 bankruptcy, an automatic stay goes into place. All of your creditors, including your car loan lender, will be notified of the automatic stay and will no longer be able to contact you or repossess your car. If your car has already been repossessed, it will also pause your lender’s effort to sell the car at auction.
Stop Repossession Efforts with a Bankruptcy Attorney
Below are some of the options you may be presented when you file for Chapter 7 or Chapter 13 bankruptcy to stop car repossession. A knowledgeable lawyer for car repossession will discuss the best options for your specific financial situation.
Chapter 7 Bankruptcy & Car Repossession:
- You can cure your default and continue paying the loan.
- You can redeem your vehicle (buy back) for the fair market value. For example, if your car is worth $2,000, but you still have $5,000 left on your loan, you can pay the $2,000 in a lump sum.
Chapter 13 Bankruptcy & Car Repossession:
- You can make more manageable payments towards your vehicle at a possibly reduced interest rate over the next three or five years.
Barbara B. Braziel Can Help
Barbara B. Braziel understands how easy it can be to fall behind on car payments, and it’s more common than you may think. We have years of experience in fighting car repossessions — and other financial hardships — so families in Savannah, Georgia, can continue to get to where they need to go. Even if you’ve only missed one or two payments, contact us today for a free consultation.