If your car or truck has been repossessed because of a missed payment, it is unlikely that you will have the financial resources to pay off the entire balance of your loan plus costs.  Some lenders – such as buy here/pay here companies – assume that a certain percentage of their customer base will default and they end up selling the same car over and over to one purchaser after another.

In addition to the hassle of a repossession, you are also likely to face a deficiency judgment for the difference between your contractual obligations and the auction sale price.

It is safe to say that nothing positive comes from a repossession and if your vehicle is repossessed you have very little time to take action.

If your vehicle has been repossessed, you basically have three options:

  1. Negotiate a default cure with your lender – in some instances, your lender might be willing to return your vehicle to you in exchange for payment of missed payments plus fees and costs.  This scenario is more likely if your lender is a first tier finance company like GMAC or Ford Motor Credit, or if your lender is a bank with whom you have had a long relationship.  A voluntary default cure is not very likely if you are dealing with a second chance lender or a buy here/pay here store.
  2. Challenge the repossession after the fact – lenders sometimes make mistakes in conducting repossessions, especially when it comes to the 10 day letter and subsequent auction sale.  You can challenge the legality of a repossession sale but doing so can be expensive and, of course, you are not likely to get your car back anytime soon, if at all.
  3. File Chapter 13 bankruptcy and use the power of the bankruptcy court to get your vehicle back.  Chapter 13 bankruptcy functions as a personal financial reorganization.  Assuming that you need your vehicle to travel to and from work, your vehicle is necessary for you to perform the obligations of your Chapter 13 repayment plan, thus your bankruptcy judge can order the lender to return your vehicle.

File Chapter 13 Before Your Vehicle is Sold at Auction

If you intend to use Chapter 13 to recover your vehicle, you must file your case prior to any auction sale date.  Thus, if you receive a ten day letter, or if more than a week or two has passed since the repossession, you need to act quickly.k

With limited exceptions, the filing of your Chapter 13 will create an automatic stay that will stop the auction sales process immediately.  In some cases, lenders will voluntarily return your vehicle after your Chapter 13 has been filed, while in other cases, we would need to file a Complaint for Turnover to ask the judge for a order compelling the lender to return your vehicle.

If you think that you are at risk of repossession, or if your vehicle has already been repossessed and you are not sure what to do, please call our office to discuss your options.



Jonathan Ginsberg represents honest, hardworking men and women in the Atlanta area who need bankruptcy protection. Call him at 770-393-4985 for a confidential discussion.

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