Many people put of filing for bankruptcy because they don't want to admit they're in trouble financially. Often it takes an event like having property repossessed to make people realize that they could really use some help. One of the biggest advantages of filing bankruptcy is the automatic stay. The automatic stay works to prevent your creditors from trying to collect anything you owe them. This has a wide-ranging effect, stopping all the collection calls and threatening letters, plus it puts a stop on any attempts at repossession or foreclosure.
But what if a creditor has already repossessed my car? Can bankruptcy do anything about that? If your car has already been repossessed before you filed for bankruptcy, filing bankruptcy can still help. If the property has not been sold, you can get your car back. Typically, after repossession your creditor will send you a notice of the amount of time within which you must pay the balance on your car. In this notice, the creditor lists a time when the car will be sold or otherwise gotten rid of. If you would like to keep your car, you may file Chapter 7 before the date of a sale. In order to obtain your vehicle, you may be required to pay the costs of the failed repossession, as well as any other related expenses that your creditor expended in good faith.
However, if your car has been repossessed, you are most likely behind on your payments. This means that the only ways for you to keep your car are for you to file Chapter 13, or to make an agreement with your lender in Chapter 7. If you choose the Chapter 7 route, there are some hurdles you will need to go through. It is important to consider whether you would like to keep your car. In Chapter 7 bankruptcy, you may have to agree to unfavorable terms in order to keep your vehicle. Additionally, financed cars are often worth much less than people owe on them, because the principal keeps rising while the value of a new car plummets very quickly. So often it's better to let the car go and file Chapter 7. This is one of many important points to discuss with your bankruptcy attorney.