R is for Repossession.
In my practice as a Colorado Springs Bankruptcy Lawyer, it’s not unusual for my clients to either have had vehicles repossessed or to be facing the prospect of an imminent repossession.
The Bankruptcy Code provides remedies in both situations.
First: If the vehicle has already been repossessed and sold by the creditor, you’ll end up with a bill for the “deficiency”.
The deficiency is the amount of money still owed to the lender after they have applied the proceeds from the sale and added in their attorney’s fees, Repo-Man fees, commissions, etc. It’s not unusual for the deficiency to be pretty substantial, $10,000 or more.
If there is a deficiency facing you after your vehicle’s been repossessed, a successful Chapter 7 case will result in the debt being discharged. Likewise with a Chapter 13, although the creditor may end up receiving payments from the Chapter 13 Plan.
Second: If the vehicle is about to be repossessed or has just recently been repossessed, but not yet sold by the lender.
In that case, by filing a Chapter 13 case ASAP, you may be able to prevent it from being taken or even get the vehicle back from the Repo-Man. In order to do that, you’ll need to get your case filed right away and make a provision in the Chapter 13 Plan so that the back payments (the “arrearage”) are caught up. Once that’s done, the lender has to give you your vehicle back, as long as it hasn’t already been sold.
I’ve been pretty successful in using Chapter 13 to get my Colorado Springs bankruptcy clients’ vehicles back after they’ve been repo’ed. The key is to get the case filed before the lender sells the car.
Other non-Colorado Springs Bankruptcy Attorneys have also written about Bankruptcy R words: Bankruptcy ABCs.