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Stop the Reposession of Your Car, Furniture or Home Appliances

How To Protect Yourself Against Car Repossession

Chances are that by the time you are reading this article you have made unsuccessful attempts to negotiate an extension on your car payments. There is no need to lose sleep wondering if your car will disappear in the middle of the night. At this point one of the best ways to protect yourself against car repossession is to file for bankruptcy.

The key is to file for bankruptcy before your vehicle is repossessed. While in some cases, you may be able to get your car back after it’s been repossessed; it is better to avoid that scenario for the following reasons:

·        Repossession charges added to past due payments

·        Possible damage to a vehicle during the repossession

·        Auto finance company less willing to negotiate payments or return vehicle

When you file for bankruptcy, all collection efforts from creditors on your vehicle and other debts will stop. What this means is that no creditor can makes calls or take any type of action to collect on any past due bills. For further questions, an experienced Fort Worth/Arlington bankruptcy attorney can discuss your specific case to answer any questions that you may have.

Auto Redemption in Chapter 7 Bankruptcy

During a Chapter 7 bankruptcy all unsecured debts are discharged. Debts that are secured by collateral (e.g. car loans) must be paid or the collateral must be returned to the lender. Occasionally an individual considering Chapter 7 bankruptcy will own a vehicle that is worth less than what is owed. This situation is often referred to as ?upside down?and usually involves a late model vehicle that has depreciated faster than the person haspaid on the loan. It doesn'?t make any sense to pay for something that is ?upside down,? but often an individual needs to keep the vehicle for transportation to work and for family use.  Fortunately, a provision of the Chapter 7 bankruptcy code allows an individual to keep a vehicle and pay only its current market value. This process is called ?redemption.? During a redemption the value of the vehicle is determined (either by agreement between the debtor and creditor or by the bankruptcy judge after a hearing) and a court order is issued directing the creditor to accept a sum from the debtor in exchange for a release of its lien. In plain terms the lender is paid a lump sum and the lien on the vehicle isreleased. For example, a debtor that owes $15,000 on an auto that is worth $10,000 will only pay $10,000.
 
Unfortunately, the payment must be made in a one-time lump sum to the lender at the time of the redemption order. If the debtor is unable to pay for the vehicle, there are finance companies that make redemption loans for debtors in bankruptcy. Before making a redemption loan these finance companies require a loan application and certain assurances of repayment. The interest rate can be high for a redemption loan, however the resulting monthly payment is often lower than the original payment. It is important to carefully consider all of the advantages and disadvantages before making a decision to redeem a vehicle:
 
Advantages of a redemption loan:
 
• Retention of the vehicle;
• Vehicle is no longer ?upside down;?
• The creditor cannot repossess the vehicle;
• Usually results in a lower monthly payment.
 
Disadvantages of a redemption loan:
 
• High interest rate.
 
Redemption is not the only option for keeping a vehicle after a bankruptcy. A skilled bankruptcy attorney can explain all of your options and help you obtain the best deal for your family.  Contact Fears | Nachawati today for a free consultation to discuss bankruptcy and auto redemption by calling toll free 1.866.705.7548 or via e-mail at info@fnlawfirm.com.

Will Bankruptcy Protect My Child's Car If It Is In My Name?

Yes, bankruptcy can help you save your vehicle. When you file for bankruptcy in Fort Worth, you need to list all the property that you possess or is under your name. When you list the vehicle, it cannot be repossessed while the bankruptcy court trustee is reviewing your case. Depending on the type of bankruptcy you file for, Chapter 7 or 13, you may be allowed to keep the vehicle if you agree to make up any past due payments or continue making payments.

Other options include evaluating the equity in the vehicle and how much is owed on the vehicle. The bankruptcy trustee will not take the car if it has no equity. In the unusual case that there is equity, you may have other options as well. If you still owe money on the car, you can reaffirm the debt. Some jurisdictions don’t require that you reaffirm the debt but only that you continue to make the payments as agreed in the original contract.

Can a creditor repossess my car or furniture?

One of the most unpleasant consequences of failing to pay your bills is "repossession" of the thing you purchased on credit or gave as security for a loan. You do have some legal protection concerning repossession, but not much.

Can a creditor repossess my car or furniture?

Yes, if you don't pay your bills on a "secured debt" - which may be created when you borrow money or pay for goods over time. You promise to pay the creditor and agree that if you do not, the creditor can take ("repossess") a specified item of property without the need for any formal legal action against you.

In many states, the creditor is not allowed to repossess the first time you miss a payment. Instead, the creditor must use that first mistake as an opportunity to teach you how a secured debt works. The next time you miss a payment, the creditor can and probably will repossess.

A creditor is allowed to repossess only if it can be accomplished without a "breach of the peace" (a violent act or an act likely to lead to violence.) Usually, a debtor can stop repossession simply by verbally objecting to it. This gives the debtor a lot of power, but in many instances thwarting repossession is not the best thing to do. You will get to keep your car or furniture longer, but you will have to pay the creditor for all the time and trouble you put him through. Many debtors who know they will not be able to make car payments decide to drop the car off with the creditor. This minimizes the costs of repossession that the debtor would otherwise have to pay.

After repossession, is the debt gone?

Maybe not. It sounds hard to believe, but in many states, you might not only lose the car, but also lose your down payment, lose the monthly payments you've already made, and still owe the creditor even more money.

If, after repossession, the creditor sells the car for less than the amount of the debt and the costs of repossession and sale, the creditor is entitled to sue you for the rest of the money and obtain a "deficiency judgment."

Stopping a repossession

It is not easy to stop a repossession, but to have any chance of doing so, you must take immediate action.

You might file for bankruptcy. Once you file your papers with the bankruptcy clerk, all creditors must immediately cease all legal actions against you - including repossession and foreclosure.

But bankruptcy is an extreme measure. Before you decide on that solution to your financial problems, be sure to consult an attorney who specializes in bankruptcy law, who might advise you regarding some other options.

If you are feeling the crunch of unemployment and do not seem to have enough money to pay your bills bankruptcy may be an option for you.  For a free bankruptcy consultation contact Fears | Nachawati Law Firm, Phone (866) 705-7584. Immediate Assistance

Fears | Nachawati has law offices throughout Texas, including Dallas, Ft. Worth, Houston, Austin and San Antonio. Our Dallas and Ft. Worth offices serve Plano, Arlington, Carrolton, Cleburne, Irving, Grand Prairie, Denton, Frisco, McKinney, Garland, Mesquite, Richardson, Rowlett, Rockwall, Greenville, Terrell, Waxahachie, De Soto, Duncanville, Cedar Hill, Everman, Crowley, Mansfield, Haltom City, Granbury, North Richland Hills, Flower Mound, Bedford, Hurst, Euless, University Park, Highland Park, and elsewhere in Dallas County, Tarrant County, Collin County, Johnson County, Kaufman County, Navarro County, Ellis County, Rockwall County, Denton County, and Hunt County.