Bankruptcy is Your Legal Right. Start your Debt Relief Today.
Leinart Law Firm will stand by you as you try to start over with your finances. We understand that people have repossession rights and that you should keep your properties and belongings, especially in situations when you find it hard to make payments to your creditors. Filing for Chapter 7 or 13 bankruptcy may be an option to consider to stop your car from being repossessed.
The thing is, credit collectors cannot just harass you and threaten to take away your possessions just because you cannot pay the money you owe them. Our repossession lawyers will fight for your rights and stop repossession. Our repossession lawyers are compassionate and knowledgeable, so they can handle your case without passing judgment on you.
Aside from helping stop repossession of your properties, we will also work with you so that you can reduce your debts and eventually settle them completely. We can help set up payment plans that will work with whatever income you are making so you can meet your monthly obligations.
The Repossession Process
The repossession process starts when your creditors begin seizing your properties and belongings. Once your possessions have been repossessed, you are given a small window of time before your rights to acquire your things back runs out. Our repossession lawyers can help you with the repossession process by filing the right paperwork so that you can keep your things and that you meet all the necessary requirements of the repossession law.You have the option to deal with your debts and prevent your belongings from being repossessed. If your car does get repossessed, there are some ways you can handle it.
First, you can file for Chapter 7 or 13 bankruptcy as it allows you to keep whatever belongings you have. At the same time, decreasing your debt as well as setting up sustainable payment plans that you can easily manage given your income. This type of bankruptcy allows you 3 to 5 years to catch up on the past due payments that you have.
Here at Leinart Law Firm, our repossession lawyer can handle the repossession process including the negotiation with your creditor. Aside from helping you keep your possessions, the repossession process also includes helping you get back on your feet by creating a financial plan, as well as planning for effective debt settlement.
Repossession in Texas
The law that relates to the repossession of properties by a creditor is stipulated by Article 9 of the Uniform Commercial Code. In Texas, there is a specific statute called the Texas Business & Commerce Code 9.609. It states that the creditor is entitled to use self-help repossession but can only seize properties and belongings that are set as collaterals in the first place. This means that prior to borrowing money, you have agreed to put up some of your belongings as collateral.
This also proves that the contract was in place indicating your collaterals in case you default. It can be done without a court order and it can be done without the creditor committing a breach of peace. To simply put it, the creditor can repossess personal property without filing a lawsuit or getting a court order to authorize any repossession attempt.
What is “breach of the peace?” There is no exact definition of this particular term, but the phrase has been defined as “to incite public turbulence that may lead to the loss of public order.” A breach of peace may mean, during a self-help repossession process, the owner of the property tries to resist the creditor repossessing his or her belongings.
The repossession process can be very stressful, but do not believe everything that you see or hear. Creditors cannot just get your possessions without following due process. To fully protect yourself, hire repossession lawyers to fight for your rights and protect you from being exploited by your creditors. Leinart Law Firm has repossession lawyers that can help you assert your rights while you are still undergoing a bankruptcy case.
How to Generally Stop Repossession
Getting your car repossessed, or the bank attempting repossession is incredibly stressful. Thankfully, there are ways in which you can stop repossession. Leinart Law has a team of experienced debt attorneys who understand repossession inside and out. Here is a guide on the basics of how you can stop repossession dead in its tracks.
Make Up Late Payments
When you are late in making payments, that doesn’t put you immediately into default. Check your contract and look at what indicates a late payment from a default. These definitions can vary from agreement to agreement. If you can, call and work with the lender to make up late payments.
Reinstate the Loan
When you reinstate a loan, you can prevent repossession or even get your vehicle back if it has already been repossessed. When you reinstate a loan, you must be current with all payments, including late fees, and pay in one lump sum.
Refinance the Car Loan
The creditor may let you refinance your loan for a longer term or another creditor may extend credit to refinance your current loan. This may work in the short term, but many times it can lead to long-term financial issues. Speaking to a credit counselor is always a great option. They may know of other resources that are available to you.
Bankruptcy is a great option for those who do not have the financial ability to rearrange payments. Bankruptcy will stop repossessions, at least temporarily. Bankruptcy is not for everyone, but you will need to speak to a knowledgeable bankruptcy attorney to determine your eligibility.
Stopping a Vehicle Repossession with Bankruptcy
One of the most powerful tools of bankruptcy—the “automatic stay”—can stop the repo man in his tracks. That’s the law that automatically goes into effect the moment your bankruptcy case is filed at court to stay—or stop— all collection activity against you or your property. Not that you want to cut it this close, but your Chapter 7 or Chapter 13 filing will force a creditor to immediately stop a repossession, even if that creditor has already sent out the repo tow truck.
Under some circumstances even if your bankruptcy is filed very shortly after the repossession, you may be able to get your vehicle back. The timing is extremely critical here, and you would have to meet certain conditions, but the point is that the “automatic stay” is very powerful.
But once the repossession is prevented, what then? The two different consumer bankruptcy options each help in different ways.
Keep or Surrender the Vehicle with Chapter 7
A “straight bankruptcy” stops the repo, and then you quickly have to make a choice to make whether you want to and can afford to keep the vehicle or will surrender it.
If you want to keep the vehicle you will likely need to catch up on the late payments within a month or two after the bankruptcy filing. Most vehicle loan creditors will not give you more time than that, especially the big national ones. That’s in part because if you want to keep the vehicle you will be required to sign a “reaffirmation agreement” excluding this debt from the discharge of your debts. By law that agreement must be filed at court before the entry of the court order discharging all your debts, which generally happens about three months after your case is filed. So your creditor will very likely want you to be current on your loan before that reaffirmation agreement is prepared and filed at court.
If you can’t pay the loan current that quickly but want or need to keep the vehicle, one possible solution is a Chapter 13 case, discussed below.
Otherwise, you will likely need to surrender the vehicle. Although losing your vehicle may not sound like a good idea, sometimes it’s the best way to go. And probably the best time for that to happen is during your bankruptcy case.
The advantages to surrendering the vehicle are 1) getting out of the monthly payments (and insurance costs); 2) avoiding having to come up with the money to pay the accrued late payments and related late fees and other possible charges; and 3) discharging any “deficiency balance,” the amount that you would owe if you would surrender the vehicle outside of bankruptcy, after the creditor sold it and applied the proceeds to the balance.
Keep Your Vehicle through Chapter 13
You can also surrender your vehicle if you are filing a Chapter 13 case. But Chapter 13 gives you some of advantages over Chapter 7 if you want to keep your vehicle:
- You generally don’t have to catch up on the back payments.
- If your loan is more than two and a half years old, you can do a “cram down”—re-write the loan to decrease the balance down to the fair market value of the vehicle. You can often also decrease the interest rate and or stretch out the payments for a longer term, all of this usually resulting in a significantly reduced monthly payment.
- The “automatic stay” preventing repossession lasts not just three months or so but potentially three-to-five years long—the length of your Chapter 13 case. You do have to keep up your end of the bargain throughout this time, otherwise the creditor may ask for permission to repossess, especially if you are not paying according to the plan. But still the potential protection is so much longer than in Chapter 7.
- You would likely have the flexibility of changing your mind and surrendering your vehicle later, if your circumstances changed.
Our Attorneys Can Help Relieve Your Debt
Our lawyers at Leinart Law Firm have extensive experience and knowledge who can provide you with expertise and advice on what to do during the repossession process. But more than stopping repossession, we also offer other debt solutions as follows: