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Have you been threatened with car repossession because you have fallen behind on your car loan?
Are you drowning in debt but worried about losing your car if you file for bankruptcy in Aurora?
Is the threat of losing your vehicle just one part of an overwhelming debt problem that has slowly grown out of your control?
Having a car in Aurora is a necessity for many residents. While residents of Colorado have access to the Mountain Metro public bus line, people who live in smaller cities like Manitou Springs or Fountain rely on cars to get to work, go to school, run errands, or even head into Colorado to spend some time in Colorado Springs, the second largest city in the state.
If you rely on your vehicle to get you around, the threat of losing that vehicle can be terrifying. Especially if you use that car to take you to work. Because let’s face it, when you’re deep in debt, you need money. To make money, you need a job. To get to your job, you need a vehicle.
It’s plain to see how easy it is to get caught in the downward spiral of debt. The stress and anxiety caused by debt is real and it can further derail your life. Sadly, the vast majority of Colorado residents who are dealing with this kind of debt did nothing wrong. They got sick and acquired medical bills or simply lost their job because of layoffs. It’s likely, something similar happened to you.
If worrying about your financial situation is keeping you up at night, contact our experienced Aurora Bankruptcy attorneys. Bankruptcy isn’t always the right option for everyone, but during your no-cost case consultation, one of our knowledgeable legal professionals will review all of your options with you to help you make an informed decision.
If you’ve financed your car, most lenders generally allow you to miss one loan payment before being threatened with vehicle repossession. Under Colorado law, you must be in default on your loan agreement for at least 10 days before your lender can send you a default notice. After your lender sends a notice of default, you have an additional 20 days to bring your loan current before your lender can repossess your car.
Many states, including Colorado, allow possessions to be reclaimed without notice, at any time or place. That means that it is legal for a state-accredited repossession team to take your car from private property. However, creditors are not permitted to confront the buyer or break the law when seizing property. These actions are interpreted as breaching the peace and they endanger the creditor’s right to the repossessed property.
Often, creditors hire a third party to repossess the property. This party too must obey the law during the repossession process or be subject to a penalty fee or a suit for damages by the buyer.
Property that has been seized may be retained by the creditor, but is normally sold to cover the expense of the buyer’s debt.
If your car has recently been repossessed and you want to get it back, all hope is not lost. Filing for Chapter 13 bankruptcy can help you reclaim your vehicle. Filing a Chapter 13 bankruptcy can force the car lender and repo company to return the vehicle immediately provided the bankruptcy is filed within 21 days of the repossession.
Filing Chapter 13 bankruptcy, also known as a “wage earners bankruptcy,” may also be beneficial for Arapahoe County area residents who still have their car, but may be in danger of having it repossessed.
In Chapter 13 bankruptcy, all of your debts are compiled or restructured into one lump sum, which you will make payments on through a court-appointed bankruptcy trustee. That means that any arrears (or past-due payments) you owe on your car are now a part of your bankruptcy repayment plan. If over the course of the 3 to 5 years that the Chapter 13 repayment plan lasts, you can manage to pay both your bankruptcy payment and your current car payments, you can keep your car. For more information on repossession and Chapter 13 bankruptcy, please contact our Aurora bankruptcy attorneys.
If you have already paid off your car loan, Chapter 7 bankruptcy may be a better option for you if you wish to avoid losing your vehicle during bankruptcy. The next section of this website gives a brief overview of bankruptcy exemptions and Chapter 7 bankruptcy.
In a Chapter 7 bankruptcy, any property you own that can’t be covered with an exemption can be liquidated by your trustee in order to repay your debts, and this could include your vehicle. However, an exemption in bankruptcy allows you to protect a certain amount of your assets, which you can keep without liability.
Colorado offers generous exemptions for Chapter 7 bankruptcy petitioners including-
Motor vehicle exemptions are mainly used to cover the amount of value of an inexpensive car. But what happens if you own a newer car worth more than the Colorado vehicle exemption?
For example, let’s say your car is worth $10,000. Colorado’s vehicle exemption threshold is $7500 worth of equity. In this situation, your motor vehicle exemption doesn’t cover your car’s value completely, so your bankruptcy trustee could sell it. If this happens, they use the $2500 that wasn’t covered by the exemption to repay some of your debt.
If you’re wondering what happens to the leftover money, all $7500 that would have been exempt comes back to you, and you can use that to purchase another car to get you around. It’s worth noting that sometimes if the profit from the sale of your car would result in more work and fees than value that can be recovered, your trustee may choose not to sell it.
Exemptions are designed to leave you some money and/or assets to make a fresh start after bankruptcy has ended. For more information on exemptions and how they can help save your car during bankruptcy, contact our office to speak with an experienced Aurora debt relief attorney.
As stressful and intimidating as it is to deal with overwhelming debt, it can be made even worse with the threat of losing your car hanging over your head. By filing for Chapter 7 or Chapter 13 bankruptcy, you can put an end to these threats and regain your peace of mind.
If debt has made you fall behind on your car payments, contact our Aurora bankruptcy attorneys. Our CO repossession lawyers offer free consultations and can review the details of your case, and help you plan your next steps.