Well, the answer to that question is probably, yes. If the bank or some other lender repossesses your car, it’s because you’re behind in the payments, and they’ve exercised their remedies to take the car back, which is their right under the documents you signed. What you have to do then is before the car is sold at an auction or other private sale, you have to file a Chapter 13 bankruptcy, and at that point, the bankruptcy is still your property and property of what’s called the bankruptcy estate. At that point, you can demand that the car be turned back over to you, and you have to give adequate protection of the lender’s interest in the car, and then under your Chapter 13 plan, you need to repay the creditor the arrears and pay what you owe on the car. Sometimes, if everything is going your way or sometimes, depending upon how long you’ve owned your car and what the car is worth, you can restructure your debt payments on the car to make it more affordable for you, but that’s all part of the Chapter 13 process. The lender can’t sell the car once you file bankruptcy because that would be a violation of the automatic stay.
My car has been repossessed? Can I get it back if I file for bankruptcy?
Ronald J. Drescher has been practicing since 1986 in the areas of business transactions, commercial litigation, loan documentation, bankruptcy, creditors’ rights, and out-of-court workouts. His experience also includes corporate reorganizations, insolvency, business and tax planning.