Depending on the chapter of bankruptcy that you file, the bankruptcy will have a definite effect on any repossession of goods you have pending. When you have secured debt, the creditor may try to take that item back if you don't pay. Most often, this happens with a car.
Bankruptcy and Repossession
If you are filing bankruptcy under chapter 7 (which completely wipes out your non-exempt debt) then it may be possible for the car company to repossess the car. Chapter 7 involves turning over assets for sale, and the bankruptcy trustee assigned to you case will determine what you can and cannot keep in order to settle your debt for a chapter 7 bankruptcy. Your car typically can be taken back by the creditor you owe money to in such a situation, or it can be sold in the bankruptcy sale.
However, if you file a chapter 13 bankruptcy, then an automatic stay will be put into place that will prevent the repossession from occurring. Additionally, during bankruptcy proceedings, the car company (of finance company) will be forced to return the car to you should they be successful in repossessing the car. Furthermore, during a chapter 13 bankruptcy, since you will be restructuring your debts, the finance company may be forced to lower your monthly payments so that they are aligned with the NADA value of the car. This will be better for you because that means you will better be able to get on your feet financially and make lower car payments but still keep the car.
Getting Help
If you decide to file a bankruptcy, you should consult with a bankruptcy attorney to see what your options are. It is important that when you are filing for a bankruptcy that you only take legal advice from the lawyer that you retained. Try to avoid taking legal advice from friends or family members. Remember that each person’s situation is different, so what may have worked for one of your friends may not work for your particular situation. For this reason a bankruptcy attorney may be able to assist you with your bankruptcy as well as advise you on what steps to take to either legally prevent the repossession from happening or to at least give you practical options for what to do if you are facing a repossession. He can assist you in deciding what type of bankruptcy to file and can fully explain how that bankruptcy filing will affect the repossession of your car or other items.
