Repossession and Bankruptcy

If you are struggling to make monthly payments on property like a car, home, major appliance, or other major purchase, you may be worried that the seller or lender will repossess the property. Repossession can be stressful, humiliating, and inconvenient. For those with property in danger of repossession, an experienced Oakland Bankruptcy Attorney may be able to help.

If you are in danger of having your home foreclosed on or car repossessed, contact the Law Office of Melanie Tavare today to find out how bankruptcy can help you stay in your home or keep driving your car.

What is Repossession and How Does it Work?

When buying an expensive item like a car, new furniture, or major appliance, most people do not pay in cash. Instead, they use some sort of financing agreement with the company who sold them the good. Alternatively, they may ask a lender, such as a mortgage company, to loan them the money. Typically, these financing agreements or loans require that the purchaser make a monthly payment. The seller or lender usually retains a security interest, which gives them the right to repossess the good if the purchaser fails to make a payment. Repossession is when the seller or lender decides to exercise this right. In the case of a car, not only can the lender repossess the car and sell it at an auction; they can also recover the difference between the sale price the car went for at auction and the balance left on the loan. This means that they can come after your paycheck or bank account to recover the money. Bankruptcy may be able to stop this from happening.

What Types of Property Can be Repossessed?

If a debtor has defaulted on a loan, a creditor may be able to repossess property in which they retained a security interest as collateral. Property that can be repossessed includes:

A home – If a buyer took out a mortgage, it is likely secured by the home itself. Failure to pay the mortgage can result in repossession of the home, also called foreclosure

A car – A car purchased with dealer financing or with a loan from a bank is typically secured by the right to repossess the car.

Appliances or furniture purchased with in-store financing – If the item is purchased with in-store financing (as opposed to on a credit card), the seller may have a right to repossess the property. If the item was purchased with a credit card, it is unsecured and cannot be repossessed.

How an Oakland Bankruptcy Attorney Can Help You Avoid Repossession

Repossession and the Automatic Stay

When you file for Chapter 7 or Chapter 13 Bankruptcy, the bankruptcy automatic stay protection immediately stops any attempt from creditors to collect on a debt. This not only means that a seller or lender must stop any attempt to repossess property, but also that they must stop any collection-related activity, such as calling you, sending you letters, or foreclosure proceedings. For debtors who are behind on their payments and need time to catch up, the automatic stay is a tremendous tool.

How Long Does the Automatic Stay Last?

Unfortunately, the automatic stay is not a permanent solution. If a creditor files a motion for relief from the automatic stay, the bankruptcy judge may lift the stay. Otherwise, the automatic stay will remain in effect until the bankruptcy case is closed or dismissed or until the debt is discharged.

For those who file for Chapter 7 Bankruptcy, the bankruptcy process typically takes three to six months, giving the debtor protection from repossession while they get their finances in order. For those who file for Chapter 13 Bankruptcy, the automatic stay can remain in effect for three to five years, if it is not lifted.

Contact a Bankruptcy Attorney for Help with Repossession Today

If property you own is in danger of being repossessed or has already been repossessed, do not wait – contact an Oakland Bankruptcy Attorney today. An experienced bankruptcy attorney can advise you about whether filing for bankruptcy is a good option for you, and how the automatic stay provisions can help you keep your house or car. Call the Law Office of Melanie Tavare at 510-255-4646 or contact us online. Our attorney has years of experience protecting debtors like you from repossession.