MARIETTA, Ga. -- Financial setbacks occur for everyone, and sometimes they result with a person filing personal bankruptcy. Often, these folks worry about losing their transportation to work, thinking:”Do bankruptcy and car repossession go together?” Credit-yogi.com is here to provide some insight about this concern, such as:

· Chapter 7 Bankruptcy

· Reclaiming the Car under Chapter 7

· Chapter 13 Bankruptcy

· Retrieving the Vehicle under Chapter 13

Chapter 7 Bankruptcy & Repossession

Once a vehicle is repossessed, the lender will make every effort to sell it in order to recoup his loss. Someone may only have two weeks or so to take action if he wants the car back, and if it’s been sold before he does so, too bad. Nothing can help him then. However, Chapter 7 bankruptcy can stop car repossession through the automatic stay. This is a time period during which creditors cannot pursue one for payment unless they get permission from a judge.

Getting the Car Back under Chapter 7

Chapter 7 bankruptcy and car repossession work together in that there are options for reclaiming the vehicle after one has filed Chapter 7. While under the automatic stay of Chapter 7, a lender is quite likely to suggest or agree to a payment arrangement rather than risk losing the left over amount. One can also redeem the car, which means that the Bankruptcy Code allows one to repurchase the vehicle for its fair market price, not for what’s owed on the loan. If the car’s fair price is less than what’s left on the loan, it can be redeemed, and one will own it completely.





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Chapter 13 Bankruptcy

Luckily for most folks, Chapter 13 bankruptcy can also halt car repossession, as it, too, has an automatic stay period. Creditors cannot come after a person while they are under the stay. Chapter 13 is a payment plan that can extend over 5 years and can get one back on track financially, so when a judge approves one’s plan, one can get the car back.



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Retaining Custody of the Vehicle under Chapter 13

Generally, under Chapter 13 bankruptcy, car repossession seldom happens. Because Chapter 13 is a repayment plan, not a discharge plan, one can keep his vehicle as long as the amount owed on it is included in that plan. Filing for bankruptcy can do serious damage to one’s credit score; adding car repossession to that can demolish it, so choosing Chapter 13 over chapter 7 is usually a very good idea.



Credit-yogi.com is a consumer-oriented website whose mission is to supply people with the answers to their financial questions by accessing the thousands of fiscal specialists who help fuel the site. Dial 866-964-9644 any time for a free preliminary conference.