Whether you have a shiny sedan, a family minivan or another type of motor vehicle, you undoubtedly use your car to drive to work and other places. If you are behind on your monthly car payments, though, you may worry about losing your only mode of transportation to repossession.
While catching up on missed payments may stop a car repossession, you likely have some other options. One of these, a bankruptcy filing, may allow you to keep your vehicle and resolve your debt issues.
A halt to collection activities
Whether you file for Chapter 7 or Chapter 13 bankruptcy protection, collection activities should immediately stop. That is, when you seek bankruptcy protection, your creditors may not keep trying to obtain payment from you. Filing for bankruptcy results in an automatic stay on creditor actions, and that includes your auto loan lender.
Stopping vehicle repossession
Just as your loan lender cannot seek payment from you during the automatic stay, the company cannot legally repossess your vehicle. If the lender has already towed your car away, it also cannot sell it.
Post-filing options for keeping your vehicle
After filing for bankruptcy, it’s important to explore your options for keeping your vehicle. These may include:
- Negotiating a new agreement with the lender
- Paying the fair market value of the vehicle in a single payment
- Talking to your bankruptcy attorney about your full range of options — you might be surprised by how much property you can keep when you file for bankruptcy.
Remember, filing for bankruptcy can help you eliminate your debts, as well as give you the breathing room you need to figure out your next steps toward a fresh start.