How to Get Back Repossessed Property by Bankruptcy

If you are planning to file bankruptcy, and a car or other property has been repossessed, you may have the option to force the creditor to return the property to you. In order to do so, you will need to have your attorney file the bankruptcy petition quickly and argue on your behalf in court that the repossession of your property qualifies as a preferential transfer.

What Property Can You get Back?

Almost any personal property that you can cover by exemption could qualify. Some common examples are:

• A Car, Truck or Other Vehicle
• Jewelry
• Furniture
• TV or Other Electronics
• Home Appliances
• Cash

Of course, the most common property repossessed is a car, and if you want it, you'll have to move quickly.

Getting a Repossessed Car Back

In order to force a creditor to return a repossessed car, you must file for bankruptcy within 90 days of the repossession. That is the law. The reality is you probably have much less time than that, because if the creditor resells the car, then you will probably not be able to get it back at that point.

How it Works

In any bankruptcy case, the court can go back about 90 days and look into payments and property transfers that may hinder the ability of other creditors to be repaid in any part. For example, if you had three credit cards with a $5,000 balance on each one, and you paid one off in full immediately prior to filing for bankruptcy, the court would see that as a preferential transfer, and reclaim the cash to disperse amongst the bankruptcy estate and creditors. If that $5,000 cash is then covered by an exemption, you would get to keep it.

Similarly, when a car is repossessed, the creditor is getting equity. The bankruptcy court can view that as a preferential transfer and force the creditor to return the car to the bankruptcy estate.

The Catch

The way this process works best is if you have an exemption that would cover the equity you had in the repossessed car. Most states allow a substantial exemption for a primary automobile, so unless you already used it up on other vehicles, you should be able to pull it off.

Making it Happen

The law is on your side in a case like this, but the court may not be quick to get the property back, and the creditor certainly won't freely return the car unless ordered to do so by the court. You will need your attorney to file motions with a very compelling legal argument to convince the court that the repossession of the car (or any other exempt property) is an unfair transfer of assets to one creditor, and that it should be part of the bankruptcy estate.

If your attorney is able to get the car returned to the bankruptcy estate, then you have options to keep it. If it's covered by exemption, then it's yours, if it's not, then you still have other options including redeeming the property or reaffirming the debt.

Talk to a Bankruptcy Lawyer to find out how you can get recently repossessed property back into your bankruptcy estate.