Due to the recent financial impact on the economy, many debtors have fallen behind on their vehicles and other means of transportation. In Florida, a creditor will likely begin attempting to repossess your vehicle if you are more than one month behind schedule. The filing of a bankruptcy can help prevent repossession or it can help prevent a lawsuit after repossession has taken place. Here are the common questions regarding bankruptcy and repossession:
How much will a Debtor owe on a vehicle after it has been Repossessed?
If your vehicle has been repossessed don’t expect to only be liable for the balance of your payments on your loan. Typically a creditor who repossesses your vehicle will sell the vehicle at an auto auction and then come after you for the difference between what it sold the vehicle for at the auction and how much the debtor owes on the note.
How will a Creditor attempt to Collect after a Vehicle has been Repossessed?
After the creditor has repossessed the vehicle and sold it at an auction they will begin by writing the debtor a demand letter stating that the debtor owes X amount of dollars and must pay in full or make arrangements to pay by calling the creditor. If a debtor ignores the letter or fails to make payments on the debt then the creditor will file a lawsuit against the debtor, which will lead to a judgment followed by wage garnishment, freezing of bank accounts, or levying property of the debtor.
How can Bankruptcy Help a Debtor after a Repossession?
If a debtor has already lost their vehicle due to repossession and the debtor is thinking if filing for bankruptcy then the debtor can extinguish the liability of that debt owed on the repossessed car simply by listing the creditor on their bankruptcy paperwork.
How can Bankruptcy Help a Debtor who is a Few Months Behind on their Vehicle Payment?
If a debtor is a few months behind on their vehicle payment, and the vehicle has yet to be repossessed, then the debtor can file a Chapter 13 bankruptcy and include the vehicle loan in the bankruptcy. By including the loan in the bankruptcy the debtor will be allowed to play catch-up on all their late payments and allow them to keep their vehicle.
How can Bankruptcy Return a Repossessed Vehicle?
If your car has recently been repossessed then you may be able to have the car returned to you but you have to act fact. A debtor will need to quickly file for Chapter 13 bankruptcy and provide, in their plan, catch-up payments to the creditor in order for them to keep their vehicle. This can become very costly as the debtor will also be responsible for the storage fees, the towing fees, and any other fees that a creditor may include on the vehicle. It is best to file for bankruptcy prior to the vehicle being repossessed.
Shmucher Law, PL assists debtors who are looking to file for bankruptcy after a vehicle has been repossessed or right before a vehicle is about to be repossessed. If you are thinking of filing for bankruptcy and would like to schedule a free consultation with a local bankruptcy lawyer then please contact Shmucher Law, PL by calling 305.741.5553 or 239.299.7833.
Shmucher Law, PL, a bankruptcy law firm, represents debtors, creditors, and trustees in bankruptcy matters throughout Broward and Miami-Dade counties.