If you’re currently behind on your car loan, your lender may attempt to repossess your vehicle. This period can be a stressful and frightening time, but it can also be a wake-up call that it’s time to do something about your financial situation. Here’s what you need to know.
1. Your Car Can Be Repossessed Without Notice
Many people are surprised when they find repossession at their door. They may not have received a notice their car was going to be repossessed. This lack of notice is intentional. Many banks won’t notify you that they’re about to repossess your vehicle because they don’t want you to try to hide it. Look at your contract: it’s very likely the lender can repossess your vehicle without notice if you are late on your payments.
2. Your Car May Be Sold
Once your car has been repossessed, your lender doesn’t have to return it to you. Though they may want to rehabilitate your loan and get you back on track, they may also decide to sell your vehicle. If they do decide to do this, you’re not off the hook. If you have a $16,000 loan and they sell your car for $10,000, you’re still liable for $6,000.
3. You Can Reclaim Your Car
On the other hand, if the car isn’t sold and your lender is willing to negotiate, you have several ways to get the car back. If you can pay the lender back for all associated costs, you can get the vehicle back, but you will need to pay the lender in cash. This isn’t something that most people can do, especially if they are already late in their loan. Some lenders will let you reinstate your loan if you are able to pay off the amount that you owe. You are going to be on the hook for any towing costs and additional fees, however, and these can be quite substantial. Otherwise, you could buy your car back at the very auction that your lender sells it at. You’ll still be liable for the back balance, though, which means that buying your car back probably isn’t the best idea because you’d have to pay for the balance you owe and buy the car again.
4. You Can Avoid Repossession
If you still have your car, you can avoid repossession entirely by declaring bankruptcy. When you declare bankruptcy, all collection actions cease, including repossession. Until your bankruptcy is complete, your lender cannot take any action toward you or attempt to take your vehicle. By the time your bankruptcy is complete, you will hopefully be in a better financial situation.You can keep your vehicle during a bankruptcy as long as you don’t have substantial equity in it and it isn’t a very expensive car. However, a bankruptcy cannot help you if your vehicle has already been repossessed, which means you need to declare bankruptcy as soon as you feel you might be subject to a repossession.Bankruptcy is a serious matter that shouldn’t be taken lightly. Still, if you’re in a difficult financial spot, bankruptcy may be your best solution. Bankruptcy can not only help you avoid repossession but also can give you some breathing room.You won’t need to worry about your creditors until you have completed your bankruptcy, and you’ll be able to wipe out some of your existing debts so you can rebuild your savings and your financial future. You can have financial stability and security if you take the right legal steps.For more information about the benefits of declaring bankruptcy, contact the capable professionals at Frances H. Hollinger, Attorney at Law.