Repossession and Bankruptcy in Florida

Let bankruptcy law work for you! If you ever worry about losing your car, major appliances or other valuable property to creditors – You’re not alone. The repossession process can be humiliating and add stress to an already difficult time in your life. Fortunately, if you are facing mounting debt, you may have legal options to protect your property and receive a fresh financial start.

Automatic Stay stops Foreclosure and Repossession

Immediately upon filing a bankruptcy case, an automatic stay is imposed. This stay acts as an injunction against any type of collection by creditors. Chapter 7 and chapter 13 bankruptcy come with an “automatic stay” which can prevent creditor’s attempts to repossess your property. The stay is used to stop foreclosure and the repossession of vehicles. The automatic stay also prevents creditors from engaging in collection activities, like intrusive calls and letters or garnishing bank accounts and wages.

Repossession: What It Is and How It Works

Repossession is a possibility whenever you buy an item based on a secured financing agreement, which is most common with larger purchases such as a car, furniture or an appliance. In these situations, if monthly payments are missed, the lender may have the right to repossess. You must BEFORE the property has been repossessed – otherwise, you might not get it back once it’s taken. Bankruptcy can PROTECT your property and STOP the harassment. Seeking bankruptcy protection may be a critical tool to protect your property before foreclosure or repossession. No two cases are identical, but both chapter 7 and chapter 13 bankruptcy come with an “automatic stay” which can prevent creditors’ attempts to repossess your property. As a result, when bankruptcy protection is sought before the property is lost, an automatic stay offers a critical benefit for people with financial struggles. The automatic stay is an injunction, as it stops foreclosures
and repossession in its tracks. The automatic stay also prevents creditors from engaging in collection activities, like intrusive calls and letters or garnishing bank accounts and wages.

The Most Common Pieces of Property that can be Repossessed are:

● Vehicle: When you purchase a car with financing from the dealer or a bank, they may retain the right to repossess in the event of non- payment. The term “vehicle” also includes trucks, boats, RV’s and other recreational vehicles.

● Appliances and furniture: Large purchases are often made with store financing, which may come with a right of repossession for non-payment.

It is important to distinguish this from items bought with a credit card. Credit card debt is not secured.

Bankruptcy options: Not only will the automatic stay stop a repossession it also comes with options regarding what you may do with your vehicle or other collateral.
Time to repay- In a chapter 13 the loan can be restructured allowing you a longer time to pay on the loan

Lower interest rates- in addition to the restructured time to repay often the interest rate can be lowered resulting in a lower and more affordable payment.

Cram down the value- many people find themselves upside down in their vehicle loan, Under bankruptcy law you may be able “cram down” the amount you have to pay on the loan to the actual value of the vehicle at the time of filing. In order to do this you must have had the vehicle for 910 days which is two and a half years. For those who are eligible to take advantage of this provision in the bankruptcy law find substantial savings and lower payments as well.

Surrender- sometimes it doesn’t make sense the vehicle or you don’t want or need the vehicle anymore. You may surrender the vehicle in the bankruptcy without the worry of the lender coming back to pursue the deficiency balance still owed once the vehicle is sold at auction.