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Attorney Bankruptcy Services

Auto Repossession

Bankruptcy can provide you with several options to solve or stop an auto repossession.

An auto repossession is not only stressful, but also can be quite expensive to the owner(s).

Auto repossession is most often authorized by you in your auto loan agreement. It authorizes the lender to repossess your vehicle in the event you fail to make your monthly car loan payments.

Depending on the lender, car repossession laws allow for repossession to occur anywhere from 60 days to 120 days after failing to make a payment.

Car repossession laws -
The process of auto repossession works as follows:

  1. A company is hired by the lender to locate and pick up your car from your home or workplace.
  2. Your car is then sold at a wholesale auto auction to the highest bidder. The price received for your car is usually a significant discount from the car's retail value or the value you could have received if you sold the car by yourself.
  3. The difference between the remaining balance on your auto loan plus costs of repossession, and the price received for your car at the wholesale auto auction is assessed against you as a "deficiency balance".
    For example, assume:
    • The remaining balance on your loan is $25,000;
    • The costs of repossession are $500; and
    • The sale price of the car at the auto auction was $12,500,
    • The "deficiency balance" you owe to your auto lender is $13,000.
    • A lawsuit is filed against you to recover the "deficiency balance" against you. However, a lawsuit need not be filed in order for a "deficiency balance" to exist. The lender has several years to collect this debt against you.

In the event your car has been repossessed and a "deficiency balance" remains after the sale of your vehicle, a bankruptcy may be able to eliminate this debt (along with your other dischargeable debt).

Be sure to disclose your auto repossession to Attorney Bankruptcy Services when discussing your case.

A bankruptcy may also prevent an auto repossession from taking place.

If your auto lender is threatening to repossess your vehicle, a bankruptcy can immediately stop any effort to repossess your car.

In addition to stopping the auto repossession, a Chapter 7 bankruptcy may enable you to buy time to repay your auto loan arrears while discharging other debt. Be advised, if you are unable to repay your auto loan arrears within a couple weeks after filing a Chapter 7, the auto lender can request the bankruptcy court authorize the repossession notwithstanding the bankruptcy.

If you cannot repay your auto loan arrears and want to return your car, you may do so after the bankruptcy filing and still eliminate your debt related to the auto loan.

On the other hand, a Chapter 13 bankruptcy may allow you to keep your car and repay your auto loan arrears on a monthly basis over a 3-5 year period.

A Chapter 13 bankruptcy may also force your lender to lower your principal balance and interest rate in repaying the auto loan.

To find out what options are available to you, or more about how Washington State car repossession laws relate to your debt condition, contact us through our contact page.

To receive a free consultation regarding your (or your friend or family member’s) debt problems, please contact us today at (206) 442-9500.

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