Can bankruptcy interfere with a car repossession?

Can bankruptcy interfere with a car repossession?

When you file for bankruptcy in Michigan, according to The Balance, an automatic stay occurs when you file Chapter 7 Bankruptcy. If collection agencies were calling your home 24-7, you will be glad to learn that the calls will stop. You will not have to spend your days worrying about when the next call will come. Most collectors cannot contact you and this can include the financial institution that backed your car loan.

Now, this does not necessarily mean that you can save your car from repossession. You may have a stay on the repossession, but with approval from the courts, the company may still repossess the car. If the company is able to show your loan agreement and prove that you are behind on payments and subject to repossession, the judge is likely to allow it.

While you can fight the lender’s claim to your vehicle within two weeks of the filing, this is not an easy task. You will have to show proof that the lender did not notify you or that the payments were lost. This may sound difficult, but there is some reassuring news. You may be able to redeem your car easier when you file for bankruptcy. This is because you may be able to pay the cash value of your car. You may have owed more on your car than it was worth. Many people can save thousands in the bill.

This information is meant to inform on what may happen to your car in a bankruptcy case. It is not intended to be used as legal advice.

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