Are you at risk of losing your car or truck to foreclosure? Under Georgia law, a vehicle lender can use “self help” and repossess your vehicle if you fall behind on your payments. Some lenders will seize your vehicle if you are even one or two days late. Fortunately, you can use the bankruptcy laws to stop the threat of repossession and restructure your loan.
Because cars and trucks are mobile and easily moved or hidden, Georgia lawmakers allow vehicle lenders to seize or repossess your vehicle if you miss a payment.
Who is Most at Risk?
Generally speaking, first tier lenders like General Motors Finance, Ford Motor Credit, Toyota Finance and similar companies will give you some warning – either by phone or mail. These large lenders are likely to work with you the first time or two you miss a payment but will become less forgiving if your late payments become a pattern.
Similarly, many credit unions and small banks have policies in place to help members keep their vehicles – if you fall behind to your credit union or bank, you should reach out to them as soon as you can to discuss options.
By contrast, buy-here-pay-here companies are not likely to give you much help. If you ended up at a buy-here-pay-here lot there is a good chance your credit was not great and these lenders will often repossess the first day you are late.
You should also keep in mind that customer service representatives for vehicle lenders may offer to work with you but then repossess your vehicle anyway.
How to Stop a Repossession
Generally speaking, if you fall behind on your car or truck loan payment, your options are limited. If you have a strong relationship with another lender (small bank or credit union) you can ask about refinancing your loan. Similarly, if you have a home equity line of credit you can use those funds to pay off your existing vehicle loan and start to pay the new lender.
If you have evidence of fraud on the part of the lender you could, in theory, file a lawsuit in state court – but that is an expensive proposition and you most likely will not get into court fast enough to protect your vehicle.
Bankruptcy offers the most certain option to prevent the loss of your car or truck to repossession.
If your desire is to surrender your vehicle and eliminate any deficiency claim, Chapter 7 may be a good option. And if you want to keep your car or truck and restructure your loan over time Chapter 13 would be worthwhile to consider.
Both Chapter 7 and Chapter 13 create something called an “automatic stay” the minute your attorney presses “file case” on the Bankruptcy Court’s electronic system. A bankruptcy case number will be generated and with a few very limited exceptions, that case number will be enough to stop the repossession agent from grabbing your vehicle.
What if My Car or Truck has Already Been Seized – Can I Get it Back?
Yes. In most cases, we can use the bankruptcy laws to force the vehicle lender to return your vehicle to you. You will have to show proof of valid insurance and you may have to pay repossession and storage fees but we can probably get your vehicle back.
What is a “10 Day Letter?”
When a lender seizes your car or truck, they cannot sell it at auction right away. First they have to give you an opportunity to redeem your vehicle by paying off the remaining balance. By law, they are required to send you a letter giving you ten days to redeem your vehicle. If you don’t respond, the lender can then sell your vehicle at auction.
Don’t Wait to Seek Help
The best time to look into the bankruptcy option is the minute you realize that you are going to have trouble making your payment. If you see vehicle payment trouble on the horizon, please call us. We don’t charge for phone conversations and we can advise you about the options available to you.