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Understanding Chapter 7 & Repossession

Mark Cappel
UpdatedDec 1, 2023

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.



Did you know?

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 Q3 2023 was $17.291 trillion. Auto loan debt was $1.595 trillion and credit card was $1.079 trillion.

According to data gathered by from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 8% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.

Each state has its rate of delinquency and share of debts in collections. For example, in Alaska credit card delinquency rate was 2%, and the median credit card debt was $518.

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.