Should your car be repossessed, reversing the situation is still possible, but it is much easier to stop a San Antonio repossession agent from getting your vehicle if you make an accurate assessment of your financial difficulties and take action before this situation arises. Typically, you are in danger of having your car repossessed if you have missed two months’ worth of payments.
Filing bankruptcy before the car is repossessed means that you and your property are subject to the ‘automatic stay’ that comes into action on the day you file. The automatic stay provides relief from the harassment of creditors while your case is being dealt with.
Bankruptcy does not mean that you will lose your property as many people assume. In fact, if you act in a timely fashion when you are in serious financial difficulties, it is a means of protecting your property from creditors and ensuring much of it is retained.
Bankruptcy can be divided into two main approaches, liquidation or reorganization. Chapter 7, the liquidation approach, works for people who have substantial amounts of consumer and/or medical debts that are beyond their means to sustain.
Although the term liquidation appears to contradict the concept of stopping repossession, this is not the case. Only non-exempt assets can be liquidated by the Chapter 7 trustee to repay debts. Property, such as a car, could have a lien against it to secure the loan, so it may also be an exempt asset and not part of the liquidation. Many people lose little or none of their property in a chapter 7 case.
Unsecured debts are dischargeable under chapter 7, and this means you are no longer liable to repay the debt. You will, however, have to continue to make car repayments although this will be made more manageable as a result of receiving a discharge of the debt burden.
Also, chapter 7 bankruptcy allows for a case to be made to the court to have the debt owing reduced to the value of the car at that time, which is likely to be less than the current loan. This process called redemption requires payment in full (in one lump sum) of the value as determined by the Court or by agreement of the parties. In this situation you get to keep the car, your disposable income is increased with the discharge of debts and the remaining debt is reduced. Another alternative is a negotiated reduction in the amount of the debt and the monthly payments by means of a negotiated reaffirmation agreement. But, there is no guarantee that the creditor will agree to reduce the amount of the secured debt or the monthly payment or the interest rate.
A further possibility to stop repossession is to file bankruptcy under chapter 13. This is a reorganization approach that suits people with regular incomes capable of recovering control of their finances through a combination of discharge and adhering to a court approved repayment plan. You may need to seek advice from a San Antonio attorney when deciding which approach to take.
If you have delayed taking action to protect your property and the car has actually been repossessed, quick action can still see the car returned. The creditor must return the car to the debtor in a chapter 13 bankruptcy as long as the debtor is still the legal owner of the vehicle. However, should transfer of ownership have already occurred, the car can still be returned to you if the transfer of ownership was actioned after bankruptcy was filed. If the transfer occurred prior to filing, the vehicle cannot be restored to you as it was not your legally owned property at the time of filing.
Clearly, in San Antonio, as in other parts of Texas, quick action is required if there is a danger of having your property repossessed.