After Filing Bankruptcy How Long Will It Take For My Car To Be Repoed?

By Jay White

June 7, 2015   •   Fact checked by Dumb Little Man

Repossession laws after filing bankruptcy will differ depending on the value of the car and the type of bankruptcy filed. With a Chapter 13, your assets are not seized, and you are responsible for adhering to a repayment plan managed by a bankruptcy trustee. With a Chapter 7, on the other hand, your car and other non-exempt assets are taken as part of the bankruptcy estate during the process. In general, these assets are sold, and a bankruptcy trustee gives the proceeds to your creditors. After unsecured debts are paid and forgiven, your slate is clean.

If you generated more money than necessary to pay your debt, you will receive your unsold assets and any excess money, but your car may not be included if you purchased it via a dealer loan since, on these cases, your vehicle is considered to be a secured asset. On the other hand, if your owned your car and you were able to discharge the bankruptcy, you would have no additional obligation to any creditors.

In most cases, filing for bankruptcy will not stop your car from being repossessed, and you cannot legally declare bankruptcy on the assumption that your loan will be closed and you will be able to keep your car. When you first file, all debt collection activity ceases to give the court an opportunity to hear your case. In other words, as soon as you have declared bankruptcy, your lender cannot come and repossess your car, nor can the company start to collect on the debt.

Something else to keep in mind is that if you declare Chapter 7 and you own a luxury or expensive vehicle, the car could be seized as an asset and then resold to pay off your debt. In other words, if you purchased a vehicle via a $60,000 car loan and you still owe $20,000 on it, the car will be taken and sold, and the remaining $20,000 will be paid via the proceeds. Once your bankruptcy is successfully discharged, the Official Receiver is not legally allowed to seize any other assets. Typically, the Official Receive will claim and take any equity that you may have between three weeks and twelve weeks of you filing. It is also important to note that, in a bankruptcy, if your vehicle is of particularly low value, the Official Receiver may leave it for business use or so that you can travel back and forth to work, especially if public transportation is unavailable where you live.

Jay White

I started Dumb Little Man many years ago so great authors, writers and bloggers could share their life "hacks" and tips for success with everyone. I hope you find something you like!

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