After a house, most people are very concerned about keeping their automobile after filing for bankruptcy. Lets face it, without their car, people often cannot make it to work or get their children to school. In today’s mobile society, people need their car more than ever.
If you own an automobile and owe money on it, the creditor has filed a UCC statement which means the debt is a secured debt. This means they debt is secured by the automobile itself. Simply put, if you are not current with your auto payments, the creditor can go and pick up the car without the bother of a laws
However, if you filed for bankruptcy, the creditor will have to ask the court permission to lift the automatic stay that was created by your filing for bankruptcy. This means that any collection proceedings must be done only after the bankruptcy court gives the creditor permission to resume collection activity.
The creditor must make a motion in court to lift the automatic stay and try to repossess the automobile. It is during this time that the debtor has an opportunity to enter into an agreement with the creditor and try to keep the automobile, or if it is not worth it, to return the automobile to the creditor without any further obligations.
If the automobile is repossessed, it is our experience that debtors can still obtain leases on new or used cars or even purchase agreements on new or used cars despite their having filed for bankruptcy.
Why? Because creditors are always protected on secured debts like automobiles.
If you are considering filing for bankruptcy but are afraid of losing your car, have your attorney contact the creditor and try to arrange a plan in accordance with your wishes, either return it or a revised payment schedule that will allow you to keep your car and get to work.