Will My Car Get Repossessed During Bankruptcy?

 Posted on December 06, 2024 in Vehicle Loans

A car is not a luxury item for most people in Texas. It is an absolute necessity. Public transportation outside of major cities like New York and Chicago leaves a lot to be desired and is not a practical solution for getting to work, grocery shopping, or taking your children to school or daycare and back home. A commute that takes 30 minutes by car might take close to two hours by bus. It is very normal for people who are considering filing for bankruptcy to be worried about the possibility of losing their cars. Many people who are thinking about declaring bankruptcy are significantly behind on bills and have already been threatened with having their vehicles repossessed. Fortunately, there are ways to keep your personal vehicle during bankruptcy. An experienced Bexar County, TX bankruptcy and repossession attorney can help you strategize to avoid being left stranded.

The Automatic Stay Temporarily Stops Repossessions 

As soon as you file for bankruptcy, an automatic stay is issued telling your creditors to stop all attempts at collecting on your debt. This means any current threats of repossession should stop immediately after you file. While the automatic stay only lasts until your bankruptcy proceedings are over, it will keep your car from being repossessed in the short term. This allows you and your attorney time to strategize so that you can keep your vehicle.

Reaffirming the Debt is an Option 

If you still owe money on your car and are determined to keep your vehicle, you can choose to reaffirm the debt. Reaffirming the debt essentially separates your auto loan from your bankruptcy proceedings entirely. You will need your auto loan holder to agree to allow you to reaffirm the debt. If your creditor agrees, you would have to keep making payments on your car but can keep your vehicle.

If you are filing a Chapter 7 bankruptcy, your other debts will be discharged completely. When you are not making payments toward other debts, you may find it much easier to keep up with your car payments.

What if I Do Not Owe Money on My Car? 

If you own your vehicle and do not still owe money on it, you might instead be worried that your car will be taken during the liquidation process. This is highly unlikely. A personal or work vehicle is nearly always considered exempt from liquidation proceedings. Courts recognize that people need their vehicles to be able to get to work so that they can recover financially after a bankruptcy.

Contact a Schertz, TX Vehicle Repossession Lawyer 

Law Offices of Chance M. McGhee will do all it can to help make sure you can keep your vehicle after bankruptcy. Experienced Bexar County, TX bankruptcy attorney Chance McGhee will work strategically to help you avoid repossession. Contact us at 210-342-3400 for a complimentary consultation.