Despite a person’s best intentions to keep up with payments, there are times when financial challenges result in missed payments. Eventually, the bank can repossess the vehicle. When purchasing the vehicle, you signed a contract that states the bank will take the car when payments are missed.
How Repossession Works
Most of the time, the lender won’t take the vehicle after one missed payment. The common approach is to send notifications about the late payment and also add a late fee. When these late payments become habitual, or you aren’t able to catch up on the overdue amount, then the bank has the right to take the vehicle.
There are two types of repossession:
· Voluntary: In a voluntary situation, you know that you can’t afford the payments, so you agree to give the vehicle to the lender.
· Involuntary: The lender comes to your home to pick up the vehicle. Regulations are in place so the repossession doesn’t disturb you or the neighbors.
Regardless of your permission for the bank to take the car, you still need to settle the loan. If you fail to pay the overdue amount, then it’s possible that the loan might be sent to a third-party collection agency.
Stop Repossession with Bankruptcy
Just because you are overdue on your payments doesn’t mean that your car will be repossessed. For example, certain types of bankruptcy filings can temporarily delay the repossession. When the bankruptcy claim is filed, most creditors cannot continue collection activities. This automatic stay gives you time to pay the amount owed, or negotiate terms so you can keep the vehicle.
The specific timeline of the automatic stay varies, depending on the type of bankruptcy you choose and the time it takes for completion. Also, it’s possible for the lender to request permission from the court to repossess the car before the case closes.
If you are facing financial challenges and potential repossession, then it’s essential that you talk to an experienced attorney as soon as possible. At Miles & Hatcher, LLP, our team offers bankruptcy support, as well as a variety of other legal services. We’re here to help you find the right solutions to get you back on track with your finances. Learn more by booking a free consultation: (909) 481-4080.