How to Stop Repossession of Your Vehicle

How to Stop Repossession of Your Vehicle

We rely on our personal vehicles to complete many essential day-to-day tasks. If you’re worried that your car might be repossessed due to debt, you are no doubt under a lot of stress. But there are several ways to mitigate the situation and prevent your vehicle from being taken away. Understanding the process of repossession and the potential consequences is an essential first step. Whitten & Whitten explores this issue and explains why filing for bankruptcy might provide a viable solution. For case-specific advice, schedule a consultation with our attorney. 

Understanding Repossession and Its Consequences

Repossession typically occurs when you fall behind on your monthly payments, such as those for a car. The lender has the right to seize the property without warning, leaving you without a critical resource and potentially damaging your credit history.

Repossession can have severe consequences:

• Credit impact: A repossession stays on your credit report for up to seven years, significantly impacting your credit score.
• Financial ramifications: It may lead to raised interest rates, reduced credit limits, or an overall drop in your financial standing.
• Collections: Your delinquent loan may be sent to collections, adding another negative mark on your credit history.

Traditional methods to halt repossession include renegotiating your loan terms or voluntarily surrendering your vehicle before repossession occurs. However, these options may not be feasible or beneficial for everyone.

The Role of Bankruptcy in Preventing Vehicle Repossession

Filing for bankruptcy may provide a more suitable option for stopping vehicle repossession. Two types of bankruptcy are most relevant: Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy involves the liquidation of nonexempt assets to pay off unsecured debts. While it may help eliminate many types of debts, it does not necessarily prevent vehicle repossession unless you can reaffirm the debt and continue making payments. The process is relatively faster, and most unsecured debts are discharged. 

Chapter 13 Bankruptcy

Chapter 13 bankruptcy allows you to restructure your debts and create a repayment plan over three to five years. This type of bankruptcy can halt repossession efforts, giving you a chance to catch up on overdue payments. As a result, you may be able to keep your property, and your credit will take less of a hit. 

Filing for Bankruptcy: A Step-by-Step Guide

1. Consult a bankruptcy attorney: An experienced attorney can guide you through the process, ensuring your rights are protected.
2. Complete credit counseling: This step is a mandatory requirement before filing for bankruptcy.
3. Prepare and file your bankruptcy petition: Document your income, debts, assets, and expenses. Your attorney can help ensure accuracy and completeness.
4. Attend the creditors’ meeting: Here, you’ll answer questions about your financial situation and bankruptcy papers.
5. Complete a debtor education course: This course is required before your debts can be discharged.
6. Receive your discharge: For Chapter 7, this typically occurs a few months after filing. For Chapter 13, it happens once you’ve completed your repayment plan.

Take Control of Your Financial Future

Filing for bankruptcy is not an easy decision, but it could be the lifeline you need to save your vehicle from repossession and pave the way to financial recovery. Our team of Highland Chapter 13 bankruptcy attorneys at Whitten & Whitten are here to help. Call now to schedule a consultation.