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If you are buried under a mountain of debt, one of the first collection efforts you might encounter is an attempt to repossess your vehicle. This can happen without warning, suddenly leaving you without any means of transportation.
The good news is that you have the chance at preventing repossession during bankruptcy in Warren. Our lawyers can assist you with the filing process and help you understand how the automatic bankruptcy stay might help.
State law gives lenders the ability to repossess a vehicle for nonpayment without going through the court system. Known as “self-help repossession,” these companies are allowed to physically take the vehicle from you if you are behind on your payments, as long as they don’t breach the peace in the process.
Once a vehicle is repossessed, the lender may sell it and apply the proceeds to the remaining loan balance. However, if the sale doesn’t cover the full amount owed, the borrower may still be responsible for the deficiency balance. Michigan law also gives borrowers some rights, including the ability to redeem the vehicle by paying off the full loan amount before the sale.
Filing for bankruptcy in Warren can halt repossession and buy you time to keep your vehicle. You may even be able to get your car back after a repossession, thanks to bankruptcy law protections, as long as it hasn’t been sold yet.
The automatic stay is a powerful protection in bankruptcy law that immediately stops most collection actions the moment a case is filed. This court-ordered pause applies to creditors, collection agencies, and even repossession agents. It also prevents collection efforts, such as lawsuits or garnishments.
Once you file for bankruptcy in Warren, the automatic stay goes into effect. That means as soon as your creditors are notified of the filing, they are required to stop attempting to collect your debt. If a lender repossesses your vehicle after the filing date, they may be in violation of federal law and subject to penalties.
The automatic stay can offer breathing room for anyone at risk of having their vehicle repossessed. This is true regardless of the type of bankruptcy case you file. These protections might be only temporary in a Chapter 7 case, as many debtors ultimately give up their vehicles. However, you have options for reaffirming the debt and continuing the payments.
In Chapter 13, you typically have between 3 and 5 years to get caught up on your missed payments. For many people, this is enough to allow them to not only avoid repossession but also to leave the bankruptcy process caught up on their loan.
The unfortunate reality is that even if you prevent the repossession of your car after a Warren bankruptcy, you might not be able to keep it in the long run. Many people find that maintaining these payments is too much, even with a discharge of their other debts.
To make matters worse, it is common for a repossessed vehicle to sell for less than what’s left on the loan. As the borrower, this deficiency balance is your responsibility. Thankfully, you can discharge these obligations through bankruptcy as well.
Preventing repossession during bankruptcy in Warren is only one of the benefits you should consider. If you are under a mountain of debt, our attorneys may be able to help you get a fresh financial start.
Let our team work to keep you in your vehicle throughout the bankruptcy process. Call as soon as possible for a private consultation.
We have locations available by appointment in the following areas. Please call us to speak to an attorney and set up an initial meeting.
We are a debt relief agency helping people file bankruptcy under the United States Bankruptcy Code.
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