How Bankruptcy Could Help You Deal With Your Car’s Repossession
With almost two-thirds of American households living paycheck to paycheck, people often fall behind on their car payments and have to worry about vehicle repossession. Auto lenders have a great incentive to repossess your vehicle even shortly after you have fallen behind on payments. They can resell your vehicle at auction, and you will still be liable for any balance left on your loan above the sale price. The lender can also add legal fees and interest, leaving you with a debt worth thousands of dollars and no car. Unless you have viable and affordable other options to get to school, work, medical appointments, and whatever else is in your schedule, a repossession could put you in a precarious financial position. If you’re dealing with a vehicle repossession and are considering bankruptcy, our firm may be a great option as your legal representation. To schedule your free consultation with one of our experienced Arizona bankruptcy lawyers, call 480-833-8000.
Can Chapter 7 Bankruptcy Stop a Repossession In Phoenix?
A Chapter 7 bankruptcy can stop a vehicle repossession if you aren’t too far behind on payments to catch up within a few months and your vehicle is exempt. Chapter 7 bankruptcy wipes out unsecured debts. Your auto loan is a secured loan because your car is attached as collateral. Unless you give the vehicle back during your bankruptcy, you can’t discharge your auto loan’s balance in a Chapter 7 bankruptcy. However, filing a bankruptcy petition enacts the automatic stay, which stops your creditors from contacting you and collecting on debts during your bankruptcy. This includes preventing your auto lender from repossessing your vehicle. This protection lasts for the lifespan of your bankruptcy, which is usually about 3-5 months in a Chapter 7 bankruptcy. If you can’t catch up your car payment before your case is discharged (or dismissed), your lender can continue with the repossession after your bankruptcy. There are several other exceptions to the automatic stay- contact a bankruptcy attorney to learn more.
The other issue with stopping a vehicle repossession with Chapter 7 bankruptcy is that Chapter 7 bankruptcy can only protect vehicles that are covered by bankruptcy exemptions. In Arizona, which does not allow federal bankruptcy exemption use, the motor vehicle exemption is $6,000. For a married couple, they can apply a $12,000 exemption to one vehicle or up to $6,000 each on two vehicles. Any equity you have more than that in a financed vehicle will not be protected in an Arizona Chapter 7 bankruptcy. For a complete list of Arizona’s bankruptcy exemptions, click here.
Does Filing Chapter 13 Bankruptcy Stop a Phoenix Vehicle Repossession?
If your vehicle isn’t covered by Arizona’s motor vehicle exemption or you can’t possibly catch up on your payments during a Chapter 7 bankruptcy, Chapter 13 bankruptcy may be a better option for you. In a Chapter 13 bankruptcy, you need to be able to pay off your loan’s full balance, including the amount you are past-due, with your disposable monthly income in your payment plan. Depending on your income and other factors, your payment plan will last either 3 or 5 years. All the while, you should be protected by the same automatic stay provided by Chapter 7 bankruptcy. This gives you plenty of time to catch up for the amount you are behind, and your vehicle will be paid in full when your bankruptcy is discharged. Based on income, Chapter 13 might be your only bankruptcy option as well. Learn more about Chapter 13 bankruptcy, as well as receive an estimate on your plan length and payments by calling 480-833-8000.
Is it Too Late For Bankruptcy To Help If My Vehicle Has Already Been Repossessed?
If your vehicle has already been repossessed, you may have assumed that it’s too late to get it back. Until the vehicle has been sold at auction, this isn’t true. In the time frame between the repossession and auction, if you file a Chapter 13 bankruptcy that proves you will pay your auto loan in full, you can have the vehicle returned to you. The lender will usually do it willingly, but otherwise you will have to file a motion for turnover so the court will return the vehicle to you. The interest rate on your vehicle may actually be lowered through this Chapter 13 plan, and you might even be able to reduce the principal balance on the loan. Call our bankruptcy team at 480-833-8000 to learn more.
What Is The Fastest Way To File Bankruptcy?
Preparing your bankruptcy petition can take a significant amount of time. You will need to gather dozens of documents related to your finances and use them to create a bankruptcy petition that is usually well over 50-60 pages long. This could take days, weeks, or even months, especially if you need to request copies of documents from government entities or file back taxes. If you know your lender has sent someone to repossess your vehicle, you don’t have time to spare while preparing your bankruptcy petition. That’s why here, you might want to take advantage of an emergency bankruptcy filing.
An emergency bankruptcy petition is also sometimes called a “skeleton petition”- it is just the bare bones of the full bankruptcy petition. The only documents you will need are your pay stubs, driver’s license, and social security card. You will also need to complete your first online credit counseling course. Your attorney may have additional paperwork that they need you to complete for an emergency filing. Once this simplified petition is filed, the automatic stay is in place, stopping vehicle repossession. You will have two weeks to submit the rest of your bankruptcy petition with the court- if you file with an attorney, check with them to see how long in advance you need to submit your documents for them to prepare your petition in time.
How Can I Hide My Car From The Repo Man While I Prepare For Bankruptcy?
The repo man will be aggressive and use stealthy methods when trying to take back your vehicle, so there’s no reason that you can’t be stealthy as well. If you’re facing the threat of repossession, keep your car locked securely in a garage or gated lot whenever possible. You may also want to consider leaving the vehicle with a trusted friend or family member. It will be even harder for the repo man to locate your vehicle if this friend or family member is out of state. Check your vehicle for any GPS tracking devices so that the repo man can’t use that to find your vehicle. And if bankruptcy is your plan to stop repossession, get your petition filed as quickly as possible.
Affordable Phoenix Bankruptcy Lawyers Experienced with Repossessions, Creditor Harassment, & More
It may seem like David versus Goliath when you’re up against a giant lending company, but our attorneys at Chapter Bankruptcy Lawyers have helped countless clients like you save their vehicles from repossession. Even if your vehicle has already been repossessed, we may be able to help you retrieve it and deal with your entire debt situation. Our team offers convenient appointments, affordable rates, and flexible payment plan options- you may even qualify to file your case for $0 down! Fill out our online form or call 480-833-8000 to let us know when would be most convenient for you to schedule your free initial consultation.