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Bankruptcy may allow you to get your car back after repossession

Whether you prefer flashy sports cars, sensible family sedans or rugged off-road vehicles, you may love your car, truck or SUV. If you have fallen behind on your monthly payments, though, a financial institution may have repossessed it.

Repossession occurs when a lender sends a tow truck to take your vehicle away. This may happen with or without advance notice or court order. While every repossession is different, a bankruptcy filing may allow you to get your vehicle back after repossession.

Chapter 13 bankruptcy protection

With Chapter 13 bankruptcy, you negotiate a repayment plan for your outstanding debts. While your ability to regain possession of your vehicle may depend on your lender’s willingness to cooperate, you probably have a decent shot with Chapter 13 bankruptcy protection.

Typically, to get your car back during Chapter 13 bankruptcy, you must give the lender a copy of the repayment plan. If the repayment plan includes full payment of your outstanding loan, it may be in the lender’s interests to accept it. Before the lender agrees to return your vehicle, though, you typically also must show you have valid insurance to cover vehicle damage or loss.

On the other hand, if the lender refuses to return your vehicle after you file for Chapter 13 bankruptcy protection, you may have to pursue a court order for its return.

Chapter 7 bankruptcy protection

Rather than reorganizing your debts, Chapter 7 bankruptcy allows you to discharge many of your outstanding balances. This likely includes your auto loan. If you discharge your car loan during Chapter 7 bankruptcy, the lender does not return the vehicle to you.

While Chapter 13 bankruptcy may help you retake possession of your vehicle after a lender repossesses it, you may be better off taking action before the repossession. If you have waited too long, though, exploring your bankruptcy options may save your car, truck or SUV.



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