Repossessions

If you qualify, our Washington state bankruptcy lawyers can help you stop car or property repossession. Our Federal and Washington bankruptcy laws allow all qualifying individuals the opportunity to financially start over again. It’s kind of like a reset button. Additionally, our legislators also understood that people would need to come through their bankruptcy with certain property and assets.

If you are behind on car payments, the car finance company can repossess the car wherever they can find it as long as they do not disturb the peace. Their right to recover the car is called “self help”. Companies that finance property like appliances, furniture, electronics or other big ticket items can not just come into your house and take the property. They have to go to court and obtain an order allowing the sheriff to do so and that process is so expensive they rarely go through it. These creditors would rather sue you and garnish a paycheck or a bank account.

A car repossession is often the greatest concern to debtors who have fallen behind on payments. Once a bankruptcy is filed, the finance company can no longer legally repossess the car. If the car is repossessed after a bankruptcy, the finance company can be sanctioned by the bankruptcy court as long as the finance company had notice of the bankruptcy.

If your car is repossessed, you can recover the car up to the date it is sold at auction but without bankruptcy you need to come up with a large lump sum for the car finance company to get it back. If your car has been sold in the past and you still owe money for it – that is, you have a “deficiency balance” for the money not paid by the sale of the car – you discharge this amount in bankruptcy.

If the car is repossessed before the finance company gets notice but after the filing, which could occur in the first days of the bankruptcy, then the car must be returned. Even if a car is repossessed before the bankruptcy is filed, but the case is filed before the car is sold at an auction, it may be possible to get the car back.

Both Chapter 7 and Chapter 13 stop repossessions immediately. However, in a Chapter 7, if the debtor can not make up the payments or “redeem” the car by paying the finance company the value of the car, then the car company will be able to repossess the car in as soon as month. Some banks specialize in “redemption loans” that specialize in loans that help debtors redeem the car.

A Chapter 13 allows a debtor to spread out the car payments for five years. It also offers a way to lower the interest. For cars purchased over two and a half years ago, a debtor can “cram down” the car or pay the finance company the value of the car rather than the whole amount of the loan. In both Chapter 7s and Chapter 13s, the debtor must carry full coverage insurance on the car, of course.

In general, it is a bad idea to wait for the car to be repossessed if you want to protect it in bankruptcy. Cars are often damaged during repossession. Losing a car, even for a short period of time, can be a huge inconvenience. Car companies won’t usually move against a car until there is a two month default. If you are struggling with debt and want to file a bankruptcy to take care for some debt to concentrate on a car payment or consolidate it in a Chapter 13, this situation is usually obvious for a long time before you need to take action. Don’t wait until the last minute to file a bankruptcy. However, if you think you are ready to file bankruptcy and need a little time to get ready, you may wish to keep a car that is in danger of being repossessed in a location where the car finance company cannot find it until you are ready to file your case.

We can help you fight to keep your car. Call the experienced Washington state bankruptcy attorneys at the Law Offices of Jason S. Newcombe today.