How Are Repossession and Bankruptcy Related?

Getting a vehicle repossessed can be scary and overwhelming. When a person finances a car, the vehicle serves as collateral for the auto loan. If the borrower cannot repay the loan as agreed, the lender can repossess the car and sell it at auction. If you are unable to make your auto loan payments, credit card payments, or feel like you are drowning in debt, bankruptcy might be something to consider.  Northland Bankruptcy Law has the experience necessary to help you navigate the bankruptcy system and obtain a fair and just financial recovery. Read on to learn more about how bankruptcy impacts the obligation of your cosigners and guarantors to pay your debts and what you can do to protect them.

What is Repossession?

Simply put, repossession is when the lender of a secured loan takes back an item – typically a vehicle – as partial payment when a person has been unable to make payments on the loan. An item can be repossessed if it was the reason for the loan, or if it was used as collateral on the loan.

Repossession does not happen without notice. The lender or other company completing the repossession must give notice before taking the vehicle. The repossessor cannot breach the peace either. This means that the vehicle cannot be taken forcibly or through threats and implied danger. After the vehicle or another item has been taken, the lender will sell the item to recover part of the repayment due from the unpaid loan. If the money received from the sale does not cover all that is owed, a person may still be held responsible for the outstanding balance on the loan.

The repossession of a house is typically called foreclosure and is a different process from repossession. Groce & DeArmon, P.C. also handles issues dealing with bankruptcy and foreclosure as well as other aspects of bankruptcy law.

If you’re having trouble making payments and are worried about repossession, you can discuss different repayment plans with your lender. It may be possible to come to a solution that benefits both parties and allows you to keep your car. Finding a payment solution also helps keep your credit score – a defaulted loan often causes significant damage to your credit.

How Are Bankruptcy and Repossession Related?

Bankruptcy and repossession are often connected, but declaring bankruptcy does not automatically lead to a vehicle being repossessed. If you declare bankruptcy before your car is taken, you are granted certain protections to prevent lenders and creditors from taking further action against you, including repossession of a vehicle. A judge will establish a payment plan which may make it easier for you to keep your car. If you file for bankruptcy and repossession has already happened, you still may be able to get your vehicle back. The option of repayment depends greatly on the willingness of the lender and your options for repayment.

Call Northland Bankruptcy Law for Help With Your Bankruptcy!

Are you currently struggling with debt? Are you searching for a way to put a stop to creditor harassment? Has a recent financial hardship placed you in a position where you may be facing foreclosure, wage garnishment, or car repossession? No matter your financial situation, Northland Bankruptcy Law can help guide you to a more stable financial future. For a more comprehensive list of all the questions you might have about bankruptcy, and for a free consultation, please call (816)-452-1800. If you have further questions about your case, do not hesitate to reach out to us by the phone number, through the contact form, or by emailing [email protected].