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Understanding Chapter 7 & Repossession

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Mark Cappel
UpdatedMay 17, 2024

My car was re-possessed, I filed Chapter 7, and it stopped the sale of my car. How can I get my car back?

My car was re-possessed by an attorney to pay off a credit card debt. I filed Chapter 7, and it stopped the sale of my car. Now my car is just sitting at the towing place. How can I get my car back? Does the Trustee have to decide what to do with my car? I can't seem to get anyone to help me with these questions.

Filing for bankruptcy protection creates an "automatic stay" that prevents creditors from proceeding with any collection action on debts owed by the bankruptcy petitioner. Even though your vehicle had already been seized for enforcement of a judgment, the automatic stay enacted by the court has stopped the creditor from proceeding with an auction of the property, as would normally happen after seizure. Until the automatic stay is lifted, the creditor cannot sell the vehicle. Since the vehicle will likely be considered part of your bankruptcy estate (the money and property used to pay your creditors), the bankruptcy trustee assigned to your case may force the creditor to turn the property over to the estate. The trustee could then sell the vehicle and distribute the proceeds amongst your various creditors. If you would like to learn more about bankruptcy, I invite you to visit the bankruptcy resources page.

Depending on the value of the vehicle, you may be able to retake possession by asserting your automobile and other personal property exemptions, allowing you to prevent the vehicle from becoming part of your bankruptcy estate. However, with the vehicle already in the possession of the judgment creditor, taking back the vehicle at this point may be an uphill battle. If the trustee takes the car, it will likely be sold to pay your creditors; if the trustee does not claim the vehicle for your estate, the creditor which seized the car may apply for relief from the automatic stay and proceed with its plans to sell the vehicle to pay down its judgment.

Since you already filed for Chapter 7 bankruptcy protection, I presume that you retained an attorney to represent you in this matter. Consult with him or her as soon as possible to discuss the options available to you to retake possession of your vehicle. If you do not have an attorney, consult with an experienced bankruptcy attorney as soon as possible to review the details of your case. I wish you the best of luck in resolving the difficulties you are experiencing, and hope that the information I provided helps you Find. Learn. Save.



Debt statistics

Debt is used to buy a home, pay for bills, buy a car, or pay for a college education. According to the NY Federal Reserve total household debt as of Q4 2023 was $17.503 trillion. Auto loan debt was $1.607 trillion and credit card was $1.129 trillion.

A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.

The amount of debt and debt in collections vary by state. For example, in Virginia, 25% have any kind of debt in collections and the median debt in collections is $1647. Medical debt is common and 14% have that in collections. The median medical debt in collections is $690.

Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.