Our Auburn bankruptcy attorneys often receive panicked calls from potential clients who recently learned that their vehicle or other property was about to be repossessed. We get it. It's one of the worst feelings in the world. Often, our clients feel like the whole situation is hopeless, at least until they reach our offices and speak with one of OUR repossession lawyers. This can be a complicated area of the law, and there's a lot of confusion out there right now on this issue.
So, here's what you need to know. In most situations, lenders are legally allowed to repossess property when payments have stopped being made on time. For example, car finance companies are entitled to “self help” when a borrower falls behind on car payments. That means they can take the car back wherever they can find it without court order as long as they do not breach the peace. Needless to say, a car repossession can be devastating to someone who is struggling financially and needs to get to work. A bankruptcy stops repossessions dead in their tracks.
Bankruptcy is one of the most powerful financial tools on the planet. And, it stops nearly all repossession actions dead in their tracks. But, even our bankruptcy laws have some limitations. A Chapter 7 does not offer a long term solution to a repossession, other than providing an opportunity to get caught up on the loan by eliminating a lot of other debt. A car finance company can ask the bankruptcy court to “modify the automatic stay” and repossess the car in as little as a month.
The same is true when it comes to the repossession of other property such as furniture, appliances, jewelry, and other high ticket items that have been financed using the asset as collateral. Our Auburn repossession and bankruptcy debt relief lawyers are very skilled when it comes to stopping repossession actions. If you are concerned about a piece of your property that seems to be facing imminent repossession, we strongly encourage you to call our offices and speak with one of Auburn bankruptcy attorneys immediately. If a Chapter 7 bankruptcy isn't your best option, perhaps a Chapter 13 bankruptcy will give you more options, especially in terms of retaining the property long-term.
How can a Chapter 13 bankruptcy help me not only stop a repossession but put me in a position to keep it?A Chapter 13 provides a long-term solution to the threat of repossession. The Chapter 13 plan allows you to consolidate the car loan with other debt and spread the payments out over five years. The car finance company cannot “modify the automatic stay” to repossess the car as long as the plan is confirmed, your payments are current and the car is fully insured.
If you file a Chapter 13 after the car is repossessed but before it is sold at auction, you can force the finance company to return it if you can prove that the car is “necessary for your effective reorganization.” However, it is much better to file a bankruptcy before the car is repossessed to avoid the costs of this action and the damage that is often inflicted on your car during a repossession. The same, of course, is true with regards to all personal property in danger of being repossessed.
Finance companies have the right to take back big ticket items like electronics, jewelry, furniture or appliances for non-payment but they cannot help themselves. They have to get a court order and have the sheriff repossess the item. This process is very expensive so the finance company rarely takes this sort of action. Instead, they will seek a judgment and garnish wages or bank accounts. In both Chapter 7 and Chapter 13 bankruptcies it is possible to negotiate a significantly lower payment for these items and keep them.
Navigating the waters of a Chapter 13 bankruptcy can be complicated, especially when there are imminent foreclosure pending. If you have questions about your legal rights and options, you should speak with a debt relief and foreclosure attorney at the first hint of trouble. Our Auburn bankruptcy lawyers know the Federal and the Washington State Chapter 13 bankruptcy laws, and we're here to help you get the information and the answers that you need and deserve.