Having worked with families struggling with debt problems for over 14 years I have had more than a few interactions with repo men (and women). And more often than not, these interaction’s don’t end well.
It was just a few months ago I wrote about a repo man that engaged in a high speed chase after a car he was trying to take resulting in an accident an killing the woman he was attempting to take the car from.
With so many bad stories about there it was refreshing to read about a Jim Ford, a repossession guy in Illinois who was tasked with repossessing a car belong to an elderly couple who had fallen behind on their car payments due to serious medical expenses.
As Mr. Ford was towing the car a way he felt he had to do something, so he decided to launch a GoFundMe campaign to try and raise the $2,200 that was still owed on the vehicle.
The next day he was surprised to see that not only had he raised the $2,200 but that donors had contributed over $3,300. Ford took the money, paid off the car, had some repairs done and the vehicle detailed and took it back to the surprised couple. The GoFundMe now as a goal to raise $20,000 to help this couple out and has already raised over $13,000.
I really enjoy reading stories like these where people are helping each other out and recognizing that just because someone has fallen behind on their bills does not mean that they are a bad person. Nice job Jim Ford!
What Happens If Your Repo Man is Not as Nice?
The reason stories like this make the news is because this is not how the typical car repossession turns out. But that doesn’t mean if your car gets repossessed that you don’t have any options.
Here are a handful of ways you can avoid repossession and even get your car back if it has already been repossessed.
Communicate with the Bank
I know that when you are behind on you bills that there is a strong desire to just put your head in the sand and hope this all goes away. This is particularly true if you really don’t have the ability to bring things current.
Many times banks will work with you to get things current and often have programs or procedures to help people who have fallen behind on their payments. However, if you cut off communication the bank doesn’t have the opportunity to try and works things and are left with the option of repossessing the vehicle to protect their interest in your loan.
It can be uncomfortable, but before you take any additional steps reach out to your bank, let them know what is going on and see if there are options to be able to keep your car.
Chapter 7 Bankruptcy Can Help You Avoid Repossession
In most cases repossession of a vehicle happens after 2-3 monthly payments have been missed. If you find yourself in the situation where you are dealing with more debt than you can pay and are behind on your car payments, you can deal with both issues through a chapter 7 bankruptcy.
As soon as a chapter 7 case is filed the bankruptcy court puts an order in place (called the “Automatic Stay”) that stops all collections – this includes repossession. So if repossession is imminent but you still have your car then you could consider a chapter 7 bankruptcy to avoid the repossession altogether.
It is important to understand that in a chapter 7 bankruptcy you will still need to come up with way to get your payments caught up. Secured debts like car loans do not go away in bankruptcy unless you give up your car. If you want to keep your car chapter 7 will buy you a few extra months, but you will need to get the payments caught up before your chapter 7 is over (usually about 4-5 months) or the bank will be able to repossess your car.
Save Money by Redeeming Your Car Through Chapter 7 Bankruptcy
Chapter 7 bankruptcy has a powerful tool when it comes to car loans. If you owe more on your car than it is worth you may want to consider redeeming your car through chapter 7.
This process permits you to pay what your car is worth, not what you owe on it. For example, let’s say our car is worth $3,500 but you owe $10,000 on it. In a chapter 7 you would only be required to pay what the car was worth – $3,500 – not what was actually owed on the car.
There is one catch – you have to pay the full $3,500 in a lump sum during your bankruptcy. You may be asking yourself, how in the world am I going to pay all that money in a lump sum?
If you can’t come up with the lump sum during your bankruptcy case then there are lenders who can loan you the money to pay off the car and then you can pay them back over time.
It is important to understand that you are not required to redeem your car and it is just an option. But if you happen to have the funds available it can save you literally thousands of dollars off the cost of your car.
Chapter 13 Bankruptcy Can Help You Get Your Repossessed Car Back
If your car has recently been repossessed a chapter 13 bankruptcy can help you get it back but you have to act quickly. Most repo companies will sell the cars they pick up within 10-14 days after the repossession.
If it has been more then two weeks since your car was repossessed it has likely already been sold and even a chapter 13 will not help you get your car back.
If it has been less then two weeks since the repossession then filing a chapter 13 bankruptcy will require the repo company to return the vehicle and then you and your bankruptcy lawyer can put together a plan to pay back your loan over the next 36-60 months.
Reduce What You Pay for Your Car in a Chapter 13 Bankruptcy
Chapter 13 bankruptcy also has a powerful tool that can reduce what you end up paying for your vehicle. This tool is called the chapter 13 “cram down”.
Here’s how it works, it allows you to pay the value of your car instead of what you owe. This is similar to “redemption” in a chapter 7 bankruptcy however you will have 3-5 years to get it paid off.
Like the chapter 7 redemption, there is a catch – you must have purchased your car at least 2.5 years prior to the filing of your bankruptcy case (910 days to be exact). If you meet those criteria you will end up paying a lot less for your car.
Facing Car Repossession? Need Help?
Having your car repossessed can be really depressing and upend everything from your job, family life, and ability to move forward. If you are in this situation I would be happy to sit down with you in a free consultation and help you put together a game plan to get you back on track.
Give us a call at (480) 420-4028 or fill out the form below.
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