1. Automatic Stay Violation: If you file for bankruptcy under Chapter 7 or Chapter 13, an "automatic stay" goes into effect, preventing creditors from taking certain actions to collect debts, including repossession. However, some lenders may not be aware of the bankruptcy filing or may proceed with repossession in violation of the automatic stay.
2. Pre-petition Secured Debt: If you have a secured loan on your car (meaning the loan is backed by the car itself as collateral), the lender can repossess the vehicle if the loan was obtained before you filed for bankruptcy and you fail to make payments after filing.
3. Reaffirmation Agreement: If you enter into a reaffirmation agreement with your car lender, you agree to continue making payments on the loan after bankruptcy. Failure to fulfill the terms of the reaffirmation agreement can result in repossession.
4. Post-petition Defaults: If you fall behind on payments for a car loan after filing for bankruptcy, the lender may seek relief from the automatic stay to repossess the vehicle. The bankruptcy court will consider the circumstances, such as your financial situation and ability to repay, before making a decision.
It's essential to consult with a bankruptcy attorney if you are facing repossession or have questions about your car loan during bankruptcy. They can help you understand your rights, options, and strategies to protect your vehicle.
