Are you behind on your car and worried that it is about to be repossessed? Usually the car finance company will give you a warning that you are behind on the payment. They normally wait at least two months before they seriously think about repossessing it but some secondary, high interest lenders are more aggressive.
A bankruptcy filing will stop the repo man immediately. A Chapter 7 will offer a temporary solution to this problem. The car finance company can repossess the car in as little as a month after you file a Chapter 7 if you are unable to catch up on the loan (which may be possible when you do not have to worry about other creditors or a garnishment). It usually takes a car company much longer before they start threatening repossession again after you file a Chapter 7.
A Chapter 13 offers a long term solution to repossession. You can restructure and consolidate your car loan in a Chapter 13 plan. As long as you keep current with your trustee payments and keep your car fully insured, your car is safe. If you have multiple vehicles that may not be necessary to restructuring your debt because, for instance, they are for amusement or a family member who does not contribute to your household, the finance company may be able to get a bankruptcy judge to agree that they are not covered by the bankruptcy protection. This is uncommon and if you are able to propose a plan that looks like it will work, the creditors usually go along with it.
Some people have the idea that creditors can come into your house and repossess furniture, electronics or appliances that secure the loan. This is not true. To repossess property like this, a creditor must go to a judge and get a bond that allows the sheriff to repossess the property. This process is very expensive and rarely used.
However, a car finance company has the right to “self help”. That means they can recover your car wherever they may find it without disturbing the peace. They can’t break into your garage to take it. It is best that you prepare for bankruptcy filing long before your car is in real danger but if you are afraid you are about to lose it, you may want to keep it out of site while you prepare your case. In some cases you can get your car back if it was repossessed just before you file bankruptcy, before it is sold at auction. This is much easier in a Chapter 13 than a Chapter 7 but is by no means guaranteed. Cars often come back from the repo lot with damage or missing valuables as well.