Repossession of a vehicle is an unfortunate situation too many people suffer. If a borrower fails to make timely payments for a car loan the lender may begin the repossession process. See Florida Statute 537.012. For many, cars are essential for getting to and from work, school and repossession can have devastating consequences. Moreover, missed payments can lead to the bank initiating repossession without even providing notice to the borrower.
Fortunately, there are options and rights for borrowers to stop car repossessions in Florida. If you received threats of repossession, contact a bankruptcy attorney for legal advice without delay. An experienced Tampa bankruptcy attorney may be able to prevent the car from being repossessed and eliminate late fees and penalties.
How to Stop a Car Repossession Quickly
If you have defaulted on a car loan, the lender usually can have the car repossessed without notifying the owner. See Florida repossession laws. Borrowers at risk of a car repo need help right away. For many borrowers facing a car repo, the automatic stay protection is the answer. The automatic stay forces creditors to stop all collections attempts against you. As soon as the bankruptcy is filed in Florida, an automatic stay instantly goes into effect. Under the stay, creditors cannot call you, continue with a lawsuit, repossess, or foreclose on your property. Regardless, how many months late payments are or how high the outstanding balance is, a repossession will be stopped
In car repo cases, timing is everything. If you may soon default on a car loan, it’s important to speak with a Tampa bankruptcy lawyer before your car is repossessed. If you wait too long, the automatic stay may not be able to help. The automatic stay only prevents the bank from taking the car, it will not force them to return a car they already had before the case being filed.
Stop a Car Repossession with Bankruptcy
The automatic stay will stop all collection activity as soon as the bankruptcy is filed, but it is not intended to be a long-term solution. Borrowers will need to consider whether they should file for Chapter 7 or Chapter 13. Each form of bankruptcy will have its unique benefits and disadvantages. The type of bankruptcy you choose will greatly impact your ability to keep the car or discharge the balance owed. If you think bankruptcy may be a solution, schedule a consultation with a bankruptcy attorney to learn more.
Payment Plan to Stop Car Repossession
Chapter 13 is the most common option for borrowers seeking to stop car repossession. Chapter 13 provides car owners with up to 5 years to pay off the car loan. In many cases, 5 years is enough time for the owner to catch up on the payments. Additionally, by spreading the payments over a new 60-month loan, it helps reduce monthly payments. A 60-month loan is a vital tool that borrowers can use to permanently stop the car repo and make the loan affordable. Most of the time, the interest rate applied is around 6%. In some cases, this will allow borrowers to save money on interest as well.
How to Wipe Out Car Loan
If you do not want to keep the car, you can surrender the vehicle and discharge the debt. Simply walking away from the automobile is not a good solution. The balance will often be thousands of dollars more due to legal fees, interest, and late penalties. If the car repo auction does not provide enough money to pay the full loan, the bank can garnish wages and place liens on your property for the remaining balance.
On the other hand, if a debt is discharged in bankruptcy the borrower will be released from all personal liability on the debt. Further, the discharge prohibits a creditor from taking any collection action against the borrower. Bankruptcy is designed to give borrowers a fresh start, not be burdened with debt from cars they no longer own.
Lien Strip a Car in Chapter 13 (Cram Down)
A cramdown in bankruptcy will allow you to keep the car and shave thousands of dollars off the loan. With a cramdown, the borrower keeps the car and will only owe the car’s market value, not the loan balance. Thus, if your loan exceeds the car’s value you may get a windfall and save thousands of dollars. For instance, if your car is worth $5,000 but you owe $9,000, you would save $4,000 (9,000 – 5,000) and get to keep the car! To be eligible, the borrower must have purchased the car at least 910 days (roughly 2.5 years) before the filing date of the Chapter 13 bankruptcy petition.
How to Lien Strip a Car in Chapter 7
Chapter 7 has traditionally been the option for surrendering a car in jeopardy of repossession. However, section 11 U.S.C. 722 of the bankruptcy code allows what is called a “redeeming” of the car- essentially, a new loan that pays just the value of the vehicle (like the cram down in Chapter 13), rather than the outstanding loan balance. Moreover, in Chapter 7 there is no 910 rule, so you won’t need to wait 2.5 years to use this option. For instance, if you only owned the vehicle for one year, you may still be eligible for reducing the car loan.
Consult a Tampa Bankruptcy Law Firm
If you are at risk of losing your vehicle to repossession, contact Florida Law Advisers, P.A., to speak with a bankruptcy lawyer. We are a customer service-oriented bankruptcy law firm committed to providing personalized attention and dedicated legal counsel. All of our initial consultations are free and convenient payment plans are available. To speak with a bankruptcy lawyer in Tampa now or schedule a free consultation, call us today at (800) 990-7763.
Frequently Asked Questions
The automatic stay will be put into effect the instant either a Chapter 13 or Chapter 7 case is filed. Generally, the automatic stay will remain in effect throughout the duration of the case. However, creditors may be granted relief from the stay, with approval from the court.
As soon as a bankruptcy case is filed, an automatic stay will instantly be put into effect. The stay will prevent the bank from attempting to repo the car.
Yes, Chapter 13 provides car owners with up to 5 years to pay off the car loan. In many cases, 5 years is enough the time for the owner to catch up the payments. Additionally, by spreading the payments over a new 60-month loan it helps reduce monthly payments.
If a borrower fails to make timely payments the lender may begin the repossession process. The car can be repossessed without notice to the car owner. Banks will usually not provide notice to prevent the owner from hiding the vehicle.
Yes, when a Chapter 7 or Chapter 13 case is filed an automatic stay is instantly put into effect. The automatic stay is a federal law which stops all forms of collection activity, including car repossessions already scheduled to occur.
In Chapter 13 bankruptcy, the borrower can have up to 5 years to pay off the car loan. This provides time to catch up on payments by spreading the past-due balance over essentially a new 60-month loan.
