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If you are behind on your automobile payments, your finance company may begin vehicle repossession proceedings after just one missed loan payment.   They may no longer believe you are a good credit risk and decide to take aggressive collection action against you.  When this happens, a "repo man" will arrive in a tow truck to haul the car back to the lender without any advance notice to you. Repossession is an aggressive form of debt collection and, in some cases, may be a violation of the individual's consumer rights. Anyone who is behind on car payments should speak with a bankruptcy attorney right away to learn what options are available to stop repossession.

What is Repossession?

Repossession is a legal process whereby a creditor collects property owned by the Debtor in which the payments have fallen delinquent.   If the creditor liquidates the collateral to satisfy their lien, any remaining balance after the liquidation (sale) is called a deficiency balance. Debtors are still obligated to pay the deficiency balance even after they lose the property

Will Filing for Bankruptcy Stop Repossession?

Yes.   The repossession department won’t tell that, in Indiana, until the vehicle is sold at auction, YOU STILL OWN THE VEHICLE.  So, when you file for Chapter 7 or Chapter 13 bankruptcy, an automatic stay is placed on all forms of debt collection.  Therefore, creditors cannot repossess assets (such as a car, boat or trailer).  Filing for bankruptcy immediately gives you an opportunity to catch your breath and figure out what is in your best interest.

What does an Indiana Chapter  7 bankruptcy do?

If you file for an Indiana Chapter 7 bankruptcy, the automatic stay kicks in as well the bank cannot repossess your car without first obtaining permission from the court.   As your bankruptcy attorney, in a Chapter 7 bankruptcy, I negotiate with the creditor and attempt to come to terms with the creditor to enter into a “Reaffirmation Agreement”, which allows you to keep the car and provides for the resumption of payments on that auto loan.  However, your options may be limited to a redemption of the vehicle.  (See Information Center for more information on redemptions and reaffirmations) During a Chapter 7 bankruptcy, a debtor has the right to “redeem” their car from the bank by making a one-time payment to pay the value of the vehicle off in full and discharge the remainder of the debt. How does this work? Say you owe $8,000 on your car loan, but the value of the car is only $3,000. If you make a $3,000 payment to the bank, you can have the remaining $7,000 debt discharged through your Chapter 7 bankruptcy! There are lenders who specialize in this type of financing. (See Resource Center for links)

What does an Indiana Chapter 13 bankruptcy do?  

In a Chapter 13 bankruptcy, you will be able to keep your car, 100% of the time, if: (1) you file a Chapter 13 bankruptcy, (2) you need the car, (3) the car is not an unreasonably high priced vehicle, and (4) you can afford to pay your required Chapter 13 plan payments.  The creditor is required to comply with the Debtor’s confirmed Chapter 13 repayment plan.   Sometimes, all you need is to cure defaults on your car loan or possibly even lower your car loan payments. Your payments can be through the bankruptcy payment plan.  

 By filing Chapter 13 bankruptcy, your debt will be reorganized and possibly reduced, and you will have the chance to repay that debt over a longer period of time, often times for less money than what you owe for the vehicle.  Chapter 13 Bankruptcy allows you to either (a) cure the arrears over the 3-5 years, (b) pay the entire note over 3-5 years at an interest rate (usually Prime plus 1 to 1.5%), or (c)  ff you have owned your car for more than 910 days before you file for Chapter 13 pay the fair market value of the vehicle over the 3-5 years at an interest rate (usually Prime plus 1 to 1.5%).  This is what is referred to as a “Cram Down,” which is one of the most powerful bankruptcy tools available.

An attorney from our firm can help you determine whether or not bankruptcy is right for you and which chapter could benefit you most.

If  Your Vehicle Has Been Repossessed, Can You Get it Back?

Yes. Maybe -  When you file for an Indiana bankruptcy, the automatic stay kicks in.   In Indiana, upon notification of a bankruptcy filing, the creditor is required to stop pursuing collection attempts WHICH INCLUDES retaining repossessed property like your car.  So, if  your car has been repossessed by a creditor but has not yet been sold, a Debtor can get it returned to him/her by filing Chapter 13 bankruptcy. Usually, creditors will hold the property for a period prior to the auction. If bankruptcy is filed before the creditor has resold the motor vehicle, a debtor can get the car back, if that is what the Debtor wants. The law permits the creditor who has repossessed the vehicle to be reimbursed for the reasonable costs of the repossession and storage fees.  These fees, however, are often much less than what is owed or past due on payments for the car. Sometimes creditors will release the vehicle to you without requiring reimbursement of those repossession and storage fees.

But you can't just sit and wait. You have to act because once the repo man has your vehicle; you have a very short time to act until the auctioneer yells “SOLD!

How do I get started?   Call Steven P. Taylor, P.C. | Kokomo and Indianapolis  Bankruptcy Lawyer

The first step in the process is finding an experienced bankruptcy attorney. We understand that for many clients, Saturdays are the only days they have off, so we make ourselves available. We welcome the opportunity to meet with you to talk to you about your situation at no charge. More than anything, we look forward to helping our clients get a fresh start so that they can start living their lives again.

Contact the law firm of Steven P. Taylor, P.C. today in my Indianapolis bankruptcy office at (317) 271-1111 or in the Kokomo bankruptcy office at (765) 868-0807 for a free consultation about whether you should file for Chapter 13 bankruptcy to save your vehicle in Indiana or email us your questions.  Steven P. Taylor will assist you in determining whether a Chapter 13 bankruptcy is the best path for you, and will guide you through the bankruptcy process

Prior to your first meeting with my office, please complete the above downloads. They can provide me with further insight into your financial situation and allow me to determine if Chapter 13 bankruptcy is appropriate for you.

We are a debt relief agency. OUR DEBT RELIEF LAWYERS help people file for bankruptcy under the united States bankruptcy code. IF YOU NEED DEBT RELIEF, OUR LAWYERS ARE READY TO HELP.