Using Bankruptcy to Get Back a Repossessed Car

It’s an unfortunate situation for many Americans these days that have been hit hard by the financial crisis. You wake up one morning to find your car is gone. It wasn’t stolen, it was repossessed.

Failure to keep up on auto loan payments is becoming a common theme in neighborhoods across our country. Fortunately, bankruptcy laws provide protection for consumers who have become in over their head by debt and bills. Additionally, once bankruptcy has been filed, your attorney will have the power to force your creditor to return the car and work out a plan for you to keep it, even at very reduced monthly payments.

Time Limit to Use Bankruptcy to Get a Repossessed Car Back

Once a car has been repossessed, the creditor will begin a proceeding to auction the car off in an attempt to regain some of the loan back. Per car repossession laws and bankruptcy laws, once this has happened, bankruptcy can longer save the car for the debtor.

In order to get the car back, the owner will need to talk to a bankruptcy lawyer immediately following the repossession to find out how to get it back.

What Happens to the Car Loan After Bankruptcy?

Once bankruptcy has been filed, and you choose to keep your car, then your attorney will attempt to “cram down” the loan as much as possible. A bankruptcy cram down is a way to reduce the principle balance on a loan to the fair market value of the property securing the loan.

In the case of an auto loan, the principle balance is often times much greater than the value of the car, since a car depreciates so quickly. When an auto loan is crammed down, the principle is lowered to the fair market value of the car. This is a way to use bankruptcy to reduce car payments and keep your car.

If your car has been repossessed, talk to a bankruptcy lawyer now to find out what options you have to get the car back and get rid of some debt, to make your monthly payments attainable. Bankruptcy and car repossession is nothing to be ashamed of, and thats why bankruptcy laws are in place to protect Americans affected by the financial crisis.