Lenders for car loans are usually quicker to repossess a vehicle than a mortgage lender forecloses on a home. The reason is that the repossession process can be done without a court order and without hiring a lawyer. Therefore, if you are one or two payments behind on your car loan, the lender may have already hired a repo company to take your vehicle.
How Are Vehicles Repossessed in Arizona?
Arizona repossession laws allow a company to seize your vehicle without a court order. However, the repossession must be a “peaceful” repossession. A peaceful repossession means that you did not attempt to stop the company from taking your vehicle. If you go outside and tell a repo company that it cannot take the vehicle, the repo company is supposed to leave.
For this reason, many repo companies take vehicles at night or while you are not at home. Some companies follow you to work or the store to take the vehicle while you are inside. As long as the repo company is not breaking any laws or trespassing, it can take the vehicle without a court order.
Can a Bankruptcy Case Stop a Repossession?
Yes, filing bankruptcy can prevent repossession of your vehicle. However, it may not prevent you from losing the vehicle if you cannot afford to keep the vehicle.
In a Chapter 7 bankruptcy case, you must catch up the car loan payments immediately, unless the lender is willing to work out an agreement. However, those agreements typically come with a catch. If you sign a reaffirmation agreement, you agree to be responsible for the entire debt.
Therefore, if you default on the loan in the future, the lender can sue you for a deficiency judgment if it does not receive all the money you owe. The deficiency judgment can result in your wages being garnished for the debt.
If you want to keep the car, you may want to consider filing a Chapter 13 bankruptcy instead.
Filing Chapter 13 and Repossessions
When you file a Chapter 13 bankruptcy case, the lender must stop all collection efforts, including repossession. Your car loan is included in your Chapter 13 plan. Since most Chapter 13 plans are 60 months long, you can stretch out the car payment for an additional five years.
Also, depending on how long you have owned the car, you could reduce the amount of money you owe on the secured lien. If the car is worth less than you owe on the loan, you might be able to pay an amount equal to the car’s value to satisfy the secured lien. The remaining balance becomes an unsecured debt. Unsecured debts are usually not paid in full through a Chapter 13 plan.
What Should I Do If I Am Behind On My Car Payments?
If you are behind on your car payments, secure the car in a safe location and call our Chandler repossession attorneys immediately. We review your financial situation and advise you about your bankruptcy options. If you qualify for Chapter 13 and you want to keep the car, we can file a case quickly to prevent the repossession.
If a repo company has taken your vehicle, you must act quickly. You might be able to get the car back if you file a Chapter 13 bankruptcy petition within 10 days of the date the vehicle was repossessed. However, filing an emergency Chapter 13 case can be stressful. It is better to talk to an attorney when you miss your first payment instead of waiting until a repo company is trying to take your car.
Contact Our Chandler Repossession Attorneys
If you are struggling to pay your bills, don’t wait until your car is about to be repossessed to talk to a lawyer. Contact Allegiant Law Group by calling 602-562-1000 to schedule your free consultation with a Chandler repossession lawyer.