Filing for bankruptcy can help you avoid vehicle repossession

Having your own vehicle isn’t a luxury. For many people, it is a basic necessity for modern life. Many companies, even those who don’t require any kind of delivery service or driving as part of the job, inquire as to whether an applicant has their own transportation as part of the hiring process.

Even if your employer doesn’t require a car, you only have to try to bring your groceries home on the bus once to understand how public transportation doesn’t really fit all of the needs that a modern family has. Having a car allows you to transport yourself to important appointments, arrive at work on time and perform necessary chores and tasks for your family.

Unfortunately, if you finance the purchase of your vehicle, you are vulnerable to the potential repossession of that vehicle until you pay it off. Losing your vehicle when you already struggle financially could make things infinitely more difficult for you as an individual and your family as a whole. Thankfully, bankruptcy can help you avoid the repossession of your vehicle.

Take action before you actually lose the vehicle

If you have fallen one or more months behind in repaying the loan for your vehicle, the lender may notify you of their intention to take more aggressive collection action. Once you know that your vehicle is in danger of repossession, you should take action to defend your ownership of the vehicle and the money you have already invested in paying for it.

Although it is sometimes possible to regain possession of a repossessed vehicle through bankruptcy or other civil filings, your ownership of the vehicle is easier to protect if you file bankruptcy before the company collects the vehicle. After all, bankruptcy filings include an automatic stay that temporarily halts collection activity, including repossession of your vehicle or the foreclosure of your home.

Chapter 13 proceedings give you a chance to renegotiate

When you fall behind on car payments, it is common for lenders to request that you pay the entire back-due amount immediately. However, you may not have the financial flexibility to alter your budget that much.

When you file Chapter 13 proceedings specifically, you have the option to set up a repayment plan as part of your filing. Lenders typically want their debts included in the repayment plan, which means they are often willing to work with the person filing and the trustee handling the case. You may be able to negotiate terms that could include lower monthly payment or at the very least moving the missed payments to the end of the repayments so that you can pay them off in the future.

The longer you wait to file for bankruptcy, the harder it will be for you to protect your assets when you can no longer fully meet all of your monthly financial obligations.