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If your car has recently been repossessed and you want to get it back, all hope is not lost. What happens to your car in bankruptcy depends both on the type of bankruptcy you file and how much equity you have in your vehicle.
If your car has already been repossessed, Chapter 13 bankruptcy is your best option. 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 Lakewood residents who still have their car, but may be in danger of having it repossessed.
With 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 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.
With 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 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.
As you might expect, the process for getting your repossessed car returned to you with Chapter 13 bankruptcy is complicated. For a more in-depth explanation, please reach out to one of our experienced Lakewood bankruptcy attorneys. During your case consultation we can go over your specific financial situation and let you know if filing for Chapter 13 bankruptcy is the best course of action.
If you have already paid off your car loan or have significant equity built up, Chapter 7 bankruptcy may be a better option for you to avoid losing your vehicle during bankruptcy.
When you file 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. 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 value of an inexpensive car. If you’re wondering what might happen if you own a newer car but still need to file for bankruptcy, here is an example of what may occur-
Colorado’s vehicle exemption threshold is $7500 worth of equity. Let’s say your car is worth $10,000. 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.
As you can see, bankruptcy laws can be confusing. Fortunately for you, you don’t have to do any of this on your own. For help with a Chapter 7 or Chapter 13 bankruptcy filing, please contact our knowledgeable Lakewood debt relief attorneys.
Technically, when you finance or lease a car, you don’t own it. Until the final payment is made, the creditor holds the title to your vehicle. That means that the creditor retains the right to repossess your vehicle if you stop making payments or if you default on your loan.
If your car has been repossessed in Lakewood, you need to act quickly– you only have about 20 days to decide whether you’re going to try and get your car back. Why 20 days? Because in Colorado a car finance company only has to keep a car for 20 days after repossession before selling it.
Once your car has been repossessed, there are four possible actions you can take-
1. Pay the missed payments to the lender
This scenario generally only works if this is the first time your car has been repossessed. Usually what happens is, you contact your finance company and speak to the lender. The lender will generally let you pay the arrears plus any repo charges incurred to get the car back.
2. Pay the entire loan off
Chances are, if you’re here reading this, you’re in debt beyond just missing some car payments, so this option probably isn’t viable for you. However, if you have the funds available, you can opt to pay the entire loan off, get the car’s title, and never have to worry about missing any payments on that car again.
3. File Chapter 13 Bankruptcy
Chapter 13 bankruptcy is the only way to force a lender to give back a repossessed car immediately without paying them any money. If the amount the lender demands to give back your car is too high, filing Chapter 13 bankruptcy in Lakewood forces them to give the car back and take payments over time. If your car has been recently repossessed in Jefferson County, and this is the route you wish to take to get your car back, please contact an experienced Lakewood Chapter 13 bankruptcy attorney as soon as possible. Time is of the essence for this option.
4. Let the Car Go
The final option is to just let the car go. This may be the wisest option if you already know you won’t be able to continue making payments on the car, leaving it open to being repossessed again. It’s worth noting that just because you’ve opted to “surrender” the vehicle to the lender, that doesn’t mean you’re not still on the hook for past payments or the deficiency balance. A deficiency balance is the amount of the original loan that remains unpaid after the lender has taken back the property and sold it to cover the bulk of the loan balance.
As you can see, there are many options available to Jefferson County residents looking to hold on to their cars while filing for Chapter 7 or Chapter 13 bankruptcy. The decision to file for bankruptcy is not an easy one, but the decision to hire an experienced Lakewood bankruptcy attorney is an important one. Schedule a free consultation with our firm today and we’ll provide you with personalized repossession and bankruptcy options.
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