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Global Bankruptcy Blog

Auto Repossession: What Can I Do To Stop It?

by Chad Johnson on 7/1/2024

As soon as you default on your loan with a creditor who has a security interest (a.k.a. lien) on your vehicle, the creditor can take the vehicle away from you. In most cases this could mean missing just one payment. However, auto repossession is more likely to happen when you get several payments behind. It's also worth noting that a creditor does not have to warn you that they are looking for your vehicle. So if you get behind on your auto payments, be ready to walk outside and find that your vehicle has vanished.

There Are Only Two Ways To Stop Vehicle Repossession

saturn sedan being repossessed by bald guy with tow truckThe only two ways to absolutely stop an auto repossession from happening:

  1. Get current on your payments. If your vehicle has already been repossessed, do not fret. There are still options to get it back, but you must act quickly. Each state has a certain time period during which you have a right to get your vehicle back — this is usually about 15 days. To get it back, you have to bring your auto payments current and pay the tow and storage fees.
     
  2. File for bankruptcy protection. Another option is file a chapter 13 bankruptcy and propose to reorganize the vehicle loan in your bankruptcy, including the tow and storage fees. A chapter 13 bankruptcy allows you to reorganize your vehicle loan, which means you can re-amortize your loan over a 36 to 60-month period and change the interest rate (currently the Fed Prime Rate + 1-3% based on the specifics of your case). If your vehicle loan is older, or it is a title loan, you could also “cram down” the principal balance to the current market value. For example, if you have a vehicle you currently owe $15,000 on, and you have had the loan for more than 910 days (or it is a non purchase money loan like a title loan) but the current resale value is only $8,000, you can re-amortize the loan based on an $8,000 principle balance at the Fed Prime Rate + 1-3%.
     
  3. Keep in mind, recent case law puts into question whether the creditor must return a repossessed vehicle to you if you file the chapter 13 after the car is taken. So if you want to use the chapter 13 process to keep your vehicle, do not delay, file your case before the car is repossessed.

Know Your Options When Facing Auto Repossession

Each auto repossession situation is unique, so you should always explore your options with an experienced attorney. We offer free consultations, which will allow us to evaluate your particular situation and explain your best options. The most important thing to remember is we can help! Don’t delay your stress and debt relief. Come see us as soon as you start experiencing difficulties with vehicle repossession.