If you wonder how bankruptcy is different and related to the repossession and the difference in Chapter 7 and Chapter 13 of bankruptcy, you should read the following article.
When an organization or individual does not keep its financial obligations or make payment to its creditors, it files for Bankruptcy Attorney Houston. For this, a petition gets filed in court. All the company’s outstanding debts are measured and paid out from the company’s assets.
The property’s taking back after a borrower is not current on payments is called Repossession. The lender either pays a third-party service to repossess the collateral or repossess itself.
It is common to wonder if your car is safe from repossession when filing for Chapter 13 bankruptcy. Chapter 13 bankruptcy will aid you get your car back if you recently lost it to repossession.
How repossession works
There are two types of repossession:
voluntary, and
involuntary
When the lender sends a debt collector to seize the defaulted property to secure the loan, it is called involuntary repossession.
Voluntary repossession occurs when the borrower renounces the collateral voluntarily to bypass the extra costs incurred when there is an involuntary repossession.
To recover as much of the due balance as possible in both cases, the lender will sell the property. Then, you will owe any pending balance not covered in the sale of the property.
You will be informed about the sale and can participate in the bidding. However, a point to be noted is that only cash is acceptable at auctions. You would likely have done the payments in the first place if you had the money.
Can Bankruptcy Stop Repossessions?
There are many cases in which the selling price of a car would be less than the car loan owed. A deficiency is the portion of the amount owed after the car is sold.
In other words, the amount recovered by selling the car is less than the amount owed. The borrower still has to pay what remains. A lawsuit to collect the deficiency amount may be filed by the creditor.
If you do not react to the lawsuit, the judge inscribes a deficiency judgment. The deficiency judgment is a kind of unsecured debt that you owe, and the creditor can take different measures to accumulate a deficiency judgment.
Some states authorize a judgment creditor to garnish pay. Wage garnishment occurs when a creditor receives a portion of your paycheck each pay period until the debt gets paid completely.
Filing Chapter 13 After a Repossession
You can recover your vehicle back and keep it after a repo with the help of a Chapter 13 repayment plan. You should consider the following points:
You only have 10-days to act
You have to file the Chapter 13 bankruptcy forms in ten days to stop the lender from selling the cars. Filing a Chapter 13 case does not get the car back if sold.
You have to pay the previous due money.
According to the repayment plan in Chapter 13, you pay the previous car payments to the creditor. Sometimes, the entire loan has to be paid through the Bankruptcy Attorney Houston repayment plan. You may be able to reduce your car payments and the interest rate on the car loan by filing a Chapter 13 case.
Filing Chapter 7 After a Repossession
You do not file a repayment plan when filing a Chapter 7 case. It is not mandatory for debtors in Chapter 7 to repay any portion of their debts, and they have to pay only for those that cannot be discharged, such as alimony, student loans, child support, etc. A bankruptcy discharge gets rid of the legal obligation to repay a debt.
In case if you have secured debt, you must be up-to-date on your payments and stay up-to-date if you want to keep the belongings you used to secure the loan.
The company that gets owed the money is a secured creditor. Secured creditors have the privilege to seize property if a person is not current on the loan payments. Therefore, if you do not complete your car payments, the lender will repo your vehicle.
What if the lender repossessed the car before you filed for bankruptcy?
If the lender repossesses your car before you file for Chapter 13 bankruptcy, you might be able to get the car back.
In your repayment plan, you will need to deliver for the payment of the arrearage and continue making your monthly payments.
You should contact an attorney immediately if your car has been repossessed and you plan to file for Chapter 13 bankruptcy.
Conclusion
People generally think of cars when they hear of Bankruptcy and repossession. When it comes to repossession, a Car is not the only item. Any item purchased via loan and you are still paying for can be repossessed.
Chapter 7 of bankruptcy states the exchange of nonexempt property for the discharge of debts. It is essential to know that property loss is a fair possibility when filing under Chapter 7.
If you are currently facing bankruptcy and repossession, you must contact an Bankruptcy Attorney Houston
to represent you immediately.
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