Facing repossession of your vehicle is a scary prospect. Quite simply, you need your car to carry out day-to-day activities. So if you’re facing repossession of your car or are behind on payments, read on to learn how bankruptcy can stop car repossession.
State Laws Provide Bankruptcy Exemptions
Many people assume declaring bankruptcy means you lose everything. But that’s typically not the case. State laws provide bankruptcy exemptions. In Ohio, there are exemption laws that prohibit certain possessions from being taken back after filing for bankruptcy. These include a motor vehicle exemption.
In Ohio, a certain amount of your car’s equity is considered protected. This means that if the exemption amount is above the equity of the car (or the amount already paid off), then a filer can keep their car. The filer, however, may have to continue making car payments as part of their bankruptcy repayment plan.
Filing Bankruptcy Can Actually Stop a Car Repossession
You’re probably wondering, can bankruptcy stop vehicle repossession? If repossession of your vehicle is imminent, filing for bankruptcy can immediately stop repossession. When you file for bankruptcy, regardless of whether you file for Chapter 7 or Chapter 13 bankruptcy, the automatic stay goes into effect.
The automatic stay is a powerful provision designed to give bankruptcy filers legally backed protections. It essentially puts a freeze on debt collection efforts and can actually stop a car repossession. When the bankruptcy case is filed, the automatic stay goes into effect right away. Among other protections, that automatic stay does the following:
- Stops any vehicle repossession efforts
- Prevents creditors from further harassing debtors or contacting them about their debt
- Halts any debt-related lawsuits filed against the bankruptcy filer
In the case of vehicle repossession, however, the automatic stay might be viewed more as a temporary solution that gives debtors space to breathe. The automatic stay does not itself eliminate debt, and that’s an important distinction.
Even if your car can no longer be repossessed, managing car payments and auto loan debt is still essential. And that’s where bankruptcy, if it’s your best option, can help.
While bankruptcy does not simply make all of your debt disappear, it can be used to consolidate debt and to make payments, such as car payments, more manageable. Everyone’s financial situation is different, so that’s why it’s important to seek assistance from a qualified Ohio bankruptcy attorney. By working with a skilled legal team, you can be sure you’re doing everything needed to protect your vehicle now and in the long run.
Many People Assume Bankruptcy Means You Lose Everything
Even though many people assume that filing for bankruptcy means you lose everything, that’s simply not the case. Knowing what you can keep when you declare bankruptcy is important.
- Bankruptcy actually provides one of the best tools for holding onto possessions.
- By declaring bankruptcy before your car is at risk of repossession, or before losing other assets, you can begin restructuring and finally paying off your debt with a bankruptcy repayment plan.
Declaring bankruptcy does not mean surrendering all of your possessions and forfeiting your financial well-being. Rather, bankruptcy provides a tool for reorganizing debt and figuring out a way to make manageable payments while also, in many cases, eliminating some or all of your debt.
For How Long Will My Car Be Protected after Filing for Bankruptcy?
After filing bankruptcy, the automatic stay will stop any current or pending vehicle repossession efforts. However, it’s important not to disregard outstanding debt on your vehicle. It’s possible for lenders to contact a bankruptcy court to seek permission to lift automatic stay protections on your vehicle.
To prevent this scenario, form a bankruptcy repayment plan with help from an Ohio bankruptcy attorney. By consolidating debt, a bankruptcy plan can make car payments and other debts much more manageable. As a result, you’ll keep your vehicle for the long term and make progress on eliminating your debt.
At Risk of Losing Your Car? Call Us.
We do not have to tell you how important your vehicle is to everyday life. If you’re at risk of losing your car due to late payments and repossession, we can help.
The legal team at Fesenmyer Cousino Weinzimmer will take the time to learn about you and your finances so that we can help you keep your car and regain your financial foothold. Give us a call today at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati).
