If it's worth less than you owe, you can "redeem" it by paying the total value in one lump sum payment. But know that Chapter 7 bankruptcy isn't the best chapter to save your car. Learn more about stopping a car repossession by filing for Chapter 13 and find out how to calculate a Chapter 13 payment plan.įile for Chapter 7 bankruptcy. Chapter 13 bankruptcy lets you pay past-due amounts over five years and keep the car, and sometimes you can pay less than you owe using Chapter 13's "cramdown" tool. The " automatic stay" in bankruptcy stops the repossession process. Or, the lender might lower your monthly payment or adjust the interest rate.įile for Chapter 13 bankruptcy. The lender might waive the late payments and move them to the end of your loan period. Call the lender and explain you're having a problem paying your loan.
If you've fallen behind on your payment, but you still have the vehicle-or even if you just lost the car and can act quickly-try the following: How to Keep Your Car From Being Repossessed However, many states offer somewhat similar protections.
The lender must follow state law when repossessing a car, and the requirements vary by state. Once sold, the lender applies the sales proceeds to the borrower's loan balance. When a borrower falls behind on a car payment, the lender makes arrangements to have the vehicle picked up and sold at auction. Learn more by brushing up on car repossession and auto loan charge-offs. For instance, a lender might have the right to repossess a financed car if the borrower doesn't maintain auto insurance. The ability to repossess a vehicle protects the lender from loss and can extend to other borrower responsibilities. What Is Car Repossession and When Does It Happen?Ĭar repossession occurs when a borrower doesn't pay a vehicle loan as agreed, and the lender exercises the right to take back the financed car.
See if you qualify to erase debt in a Chapter 7 case.Learn about the differences between Chapter 7 and 13 bankruptcy.
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