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  • Writer's pictureDaniel Rodriguez

How Late Can Your Car Payment be Before it Gets Repossessed?

If you have missed car payment or two, you are probably losing sleep each night, wondering what day you are going to wake up and find your car repossessed. Every day you find your vehicle untouched feels like a reprieve. One question you might have, is when can a lender repossess your vehicle?

Typically, a lender has the right to begin the repossession process if you are one day late on one payment. While they are not required to do so, most lenders will attempt to collect the past due payment or payments before having your car repossessed. However, every lender is different.

At the Bankruptcy Group, our attorneys and staff understand the anxiety that the threat of repossession brings. If you are already behind in your payments, it seems impossible to pay the additional fees and charges associated with repossession. Below, one of our Roseville bankruptcy attorneys takes a closer look at repossession and your available options. If your car is in danger of being taken back by your lender, contact our office at 1-800-920-535.

Repossession Laws in California

If you miss one car payment in California, the lender has the right to repossess your car. It is important to understand that a repossession could occur for reasons other than missing a payment. For instance, if you breach a loan agreement by letting your insurance lapse, your lender could begin the repossession process. Your lender is under no obligation to give you notice of their intent to repossess and it does not require a court order.

Your car could be repossessed from a publicly accessible place, including a street, parking lot, your driveway. The repossessing agent is not permitted to enter a private building or secured area, such as your locked garage, without permission from the person in lawful possession of the property. You do not have to be present for your vehicle to be repossessed. However, a repossession agent is prohibited from breaching the peace, threatening violence, or damaging personal property in the act of taking the vehicle.

Under California law, a lender must send you a series of notices after your car has been repossessed. You should receive a notice of the seizure, an inventory of your personal property, and information on how to get your vehicle back through redemption or reinstatement.

Once your vehicle is repossessed, the lender will sell it at auction or through a private sale to satisfy the balance of your loan. The lender will likely sue you for any deficiency that remains.

How Bankruptcy Helps With Repossession

Bankruptcy is a potent tool for people who are overwhelmed with debt. It also provides a mechanism to help people catch up on secured debts, including car payments. When someone files for bankruptcy, an injunction goes immediately into effect that prohibits your creditors from taking action to collect on the debts you owe. This automatic stay is a legal wall that prevents your lender from repossessing your car. Furthermore, if your vehicle was repossessed but not sold, the lender will have to return it to you.

Chapter 7 and Repossession

There are two chapters of bankruptcy that people in California typically file for and each will affect a repossession significantly differently. Chapter 7 is often referred to as a straight or liquidation bankruptcy. A debtor will file for Chapter 7 to eliminate the bulk of their debts. If your car is threatened with repossession, Chapter 7 will temporarily stop your lender from repossessing it. However, because there is no mechanism in Chapter 7 to pay the arrears on a secured debt, the lender will likely file a motion for relief, requesting permission from the court to repossess the car. The main benefit of filing for Chapter 7 is discharging any deficiency that might exist after your vehicle is repossessed and sold. However, in some cases, filing for Chapter 7 frees a debtor from other financial obligations, allowing them to pay the money they were behind. Our Sacramento Chapter 7 bankruptcy lawyers are available to review the benefits and drawbacks of Chapter 7.

Chapter 13 and Repossession

If you want to keep your car, then you will probably have to file for Chapter 13. The major difference between Chapter 13 and Chapter 7 is that in Chapter 13, the debtor will file a bankruptcy plan and pay a portion or all their debt over the next three to five years. Contact our Irvine Chapter 13 bankruptcy attorney to discuss the various requirements for filing a Chapter 13 bankruptcy.

While a lender technically can repossess your car if you miss one payment, it rarely occurs that quickly. In many cases, when a vehicle is repossessed, the owner will be two or three payments behind. Through a Chapter 13 bankruptcy plan, a debtor will have three to five years to pay what they are behind. However, you should thoroughly review your situation with our experienced bankruptcy attorneys. If you are filing Chapter 13 just because you are two payments behind on a car, you are using a sledgehammer when a rubber mallet is all that is necessary. Nonetheless, if your car was repossessed and is about to be sold, Chapter 13 might be your only viable option.

An additional benefit of filing for Chapter 13 is the ability to cram down your car payment. If you have purchased your car at least 910 before filing for bankruptcy, your total payment amount might be able to be lowered to the vehicle’s fair market value. If possible, this could make keeping the vehicle easier than you initially thought.

Contact Our California Bankruptcy Attorneys if Your Car is About to Be Repossessed

People rely on their cars for numerous things, including getting to and from work. If your vehicle is repossessed, you could be facing serious challenges and financial difficulties. Remember, if a payment is one day late, your lender has the right to take your car without notice. If you are behind on car payments, contact our experienced Sacramento bankruptcy attorneys before losing your vehicle. For a free appointment to review your options, call our office at 1-800-920-535.

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