Most auto lenders do not sympathize with someone experiencing financial problems. When a payment is late, there are exceptions, but most simply could care less about a borrower’s personal difficulties, whether a debilitating illness or loss of employment. Their expectation is that timely payment will be made each month. If this fails to happen, for whatever reason, it won’t be long before they want to repossess the vehicle.
Literally, the second that someone files a bankruptcy case, a motor vehicle lender is legally stopped or prevented from repossessing the debtor’s vehicle by the automatic stay. The automatic stay becomes effective the moment a case is filed. [More about the “automatic stay” in future blogs.)
If an auto lender has already repossessed the vehicle, it is legally obligated to return it if the debtor makes such a request. Again, federal law through the automatic stay compels the return of the vehicle.
Repossession does not end a borrower’s responsibility for the obligation that arises from buying a motor vehicle, motorcycle, boat, or motor home. A vehicle that is repossessed is usually sold at an auction.
Rarely does a lender receive the balance of the motor vehicle loan, including all the fees and costs incurred by repossession and sale. A repo is a good way for a car creditor to add all kinds of exorbitant fees and costs, authorized by the loan agreement, to the loan balance. Thus, a deficiency, the difference between the loan balance and auction price, is created which the original borrower is legally obligated to pay.
Filing a Chapter 13 bankruptcy case stops the auction of the repossessed property and legally compels a creditor to return it immediately. Thus, a Chapter 13 bankruptcy case is a powerful tool to negate the adverse effect of a repossession on a bankruptcy debtor’s credit score.
One such right in bankruptcy is the possibility of reducing the balance of a motor vehicle loan under certain conditions. A “cram down” modifies future payments by formulating new and improved payment terms such as the loan’s interest rate and length.
In this situation, lenders are not concerned whether borrowers are aware of their legal rights and protections. Theron Morrison and the attorneys at MLG are experienced in battling car creditors and will assert a debtor’s rights and demand that lenders do the same!
Theron Morrison cares about protecting your rights. This includes making your car creditor return your car without delay when it’s been repossessed. Talk to the Morrison Law Group about your Chapter 7 or Chapter 13 bankruptcy options. Call 801.456.9933 today to schedule a FREE consultation. We have locations in Ogden, Logan, Sandy, and St. George to serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas.
