Repossessions and Bankruptcy
Repossession occurs when a lender takes back property that was used as collateral or leased in a transaction. If you are behind on a car payment, the lender that financed your vehicle can repossess it at any time. California law does not require any special notice of repossession. This is a unique area of the law, and one of the more aggressive collection actions in California.
When you purchased your vehicle, you probably signed a purchase contract or credit contract to finance the car. In these contracts, the buyer agrees that the seller, also known as the “lien holder,” may repossess the property if the buyer falls behind on payments at any time. Most lenders allow for a small grace period, but some jump at the chance to repossess your vehicle. These contracts may also include fines and penalties the buyer must pay to cover the costs of the repossession, as well as the depreciated value of the vehicle, and most of the time they also can get awarded court costs associated with the repossession.
Repossession Process
When your lender chooses to repossess the vehicle, they will usually work with a repossession agent. Most repossession agencies focus on auto repossession. The agent typically uses a tow truck to repossess the vehicle, although some agencies will notify the owner and try to facilitate an amicable return without any surprises.
Many of our clients have lost their vehicles through the repossession process. Some of them were only late by a few days. Small lenders and banks are typically very aggressive and will exercise their repossession rights in a timely fashion.
Bankruptcy Can Save Your Vehicle
Once your car is repossessed, your options are extremely limited. You can try to pay the balance owed at that point (which is probably not an option) or you can file an emergency Chapter 13 bankruptcy. Unfortunately, time is not on your side once they repossess your car.
You have ONLY 10 DAYS usually after the repossession to file for Chapter 13 bankruptcy and save the vehicle. After this window expires, the vehicle will be sold at auction. If the lender fails to recoup the amount owed on the vehicle at auction, you may be responsible for the balance owed.
To maintain possession of your vehicle and avoid repossession, please contact Fong Law Group today for a free consultation at (626) 289-8299.
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