It’s not unusual for an individual who is suffering from financial hardship to fall behind on payments to his creditors. For instance, if you miss a payment on a credit card debt, the company will most likely call you the next day asking for money or if you don’t pay on a doctor’s bill, the medical office will start sending letters. Likewise, when you are unable to make a car payment, the creditor will threaten repossession.
To begin with, the reason why a car creditor has the right to repossess your automobile is because it is a ‘secured’ debt. What makes it secured (as opposed to ‘unsecured’) is that there is underlying collateral (i.e. the car). This means that if you stop making payments, the creditor is allowed to come and take back (or ‘repossess’) the collateral.
So what happens once the car is repossessed? Well, if the goal is to get the car back, one route you could take is filing a St. Louis Chapter 13 bankruptcy. When such a case is filed, the creditor is ordered to give back possession of the car to you. And while you are inside the Chapter 13 payment plan, you’ll have the chance to make monthly payments on the car through a Trustee (usually with a much lower interest rate).
But there is a catch: Once the car is repossessed, you’ll only have a limited period of time before the creditor will sell it, and once it is sold, the chances of getting it back are extraordinarily slim. Typically, you will have between ten and twenty days after the repossession to get the bankruptcy petition filed and take back possession of the car.
Of course, if the car is repossessed and you are unable to file a case before the creditor sells it, the creditor will undoubtedly come after you for the deficiency on the loan. A loan deficiency occurs when the creditor sells the repossessed car after the 10 to 20 day period, but is not able to sell the vehicle to cover the balance of the existing loan. So for instance, let’s say that you owed $10,000 on your car when it was repossessed. And the creditor sells the car, but is only able to get $5,000 for it. This in turn means that a deficiency of $5,000 (the difference between the loan balance and the amount it actually sold for) is created, and the creditor can demand that you cover that deficiency. In this type of situation, it might be better to look at a St. Louis Chapter 7 bankruptcy, in which all unsecured debts are discharged (because the deficiency you owe on the repossessed car is now considered ‘unsecured,’ since there is no longer any collateral).
In either scenario, the St. Louis bankruptcy attorneys at The Law Office of Jennifer Alter-Rieken are ready to answer your questions and help guide you in the right direction. Our staff is waiting to take your call, and all phone and office consultations are free of charge.