The Facts About Repossession And How It Works
by James Copper
When you face repossession of your home or your car, you may
need to declare bankruptcy to save them. If creditors have a
valid lien or mortgage on either your vehicle or you real
estate filing bankruptcy will temporarily stop any repossession
If you have already had your car or home repossessed
(foreclosed on, in the case of your house) you may still be
able to get either or both back if you act right away.
If you file a chapter 13 bankruptcy you should be able to keep
your home and your car. If you file a chapter 7 bankruptcy you
will keep both for awhile but you might ultimately be faced
with repossession for liquidation.
Depending on which U.S. state you live in, and what the state
laws say about the matter, the trustee of that bankruptcy may
be charged with liquidating both your car and home to pay your
Declaring bankruptcy, while it can halt or at least slow down
the repossession process should not be looked at as the
preferable cure for your financial problems.
While it is one course of action - and if it gets to the point
of repossession drastic action would be required to save your
home and vehicle - it's always best to try to salvage the
situation through debt consolidation, loans or negotiation with
Bankruptcy will give you somewhat of a fresh financial start
but it can have consequences almost as grave as repossession.
The fact that you had a bankruptcy will be on your credit
record for ten years, and that is a matter of public record,
unlike your other credit history. If you should run into
similar financial crises and subsequently repossession
possibilities you won't be able to again declare bankruptcy for
another eight year.
There are two types of bankruptcy, as we mentioned before, that
will help you keep your home safe from foreclosure and your
vehicle from repossession. A Chapter 7 bankruptcy is a short
term band aid whose help depends on your home's equity and that
state's laws on homesteading and personal bankruptcy.
If you file for a Chapter 13 bankruptcy, however, not only will
it stop that repossession and foreclosure but it will more than
likely save you from losing your home at all. With a Chapter 13
bankruptcy you will make arrangements to pay some of your debt
and generally all of your debt on any secured loans.
Chapter 13 is sometimes called a wage earner bankruptcy because
it lets debtors who have their own consistent income create a
financial plan to repay at least a portion of their debts.
With a typical Chapter 13 the debtor ask the creditors to
accept installment payment for three to pay years. During this
time frame these creditors are legally restricted from
continuing collection efforts or starting any new ones.
The debtor's level of income and the type of bankruptcy
determine the time allowed for repayment. The primary benefit
to choosing a Chapter 13 over a Chapter 7 is to save a home and
car from repossession.
This is in sharp contrast to a Chapter 7 bankruptcy in which a
trustee takes repossession of all or most of the debtor's
property and liquidates it to settle debts.
Once the possessions are sold and the money paid to creditors,
all debts are erased whether there was enough money to pay them
off or not. There are some exceptions, of course. Bankruptcy
will not protect a U.S. citizen from the IRS.
About The Author: James Copper is a repossession specialist and
has spent many years helping people to avoid and stop