When a debtor falls behind on a car payment, the car finance company can help themselves to the car wherever they can find it. A bankruptcy will stop the repossession process immediately. If a car company repossesses the car after the bankruptcy is filed, they have to give it back or face sanctions from the bankruptcy court. It is much easier to file the bankruptcy in plenty of time so that does not happen. If the car company did not know of the bankruptcy they can not be sanctioned for the repossession but they still have to give the car back. Cars can be damaged in a repossession so if you are in trouble with car payments, keep the car in a place where the finance company can not find it until you are sure they know the bankruptcy has been filed.
A Chapter 7 can provide only a month of breathing space from repossession if you are behind on payments. You may be able to come up with some arrangement with the car company but they may be after the car in only a month if you stop a repossession with a Chapter 7.
Chapter 13 offers a three to month repayment plan. You can consolidate a car loan with other debt in a Chapter 13 and end up paying a lot less for a car. As long as you make trustee payments and keep the car fully insured, you do not have to worry about your car being repossessed in a successful Chapter 13 case.
Some people are making payments on other property that the creditor has a right to recover in the event of a default, such as mattresses, furniture, computers, electronics, jewelry and appliances. Finance companies can not just some someone into your home to repossess these items. They need a court order and the sheriff has to take the item back. The process for getting this order is expensive and creditors who have loaned money for big ticket items prefer garnishing wages or bank accounts for the loan. After filing bankruptcy, these creditors are usually willing to accept pennies on the dollar for the loan or they may just write the loan off as discharged and make no attempt to recover the property after bankruptcy.