If you own a car and are considering bankruptcy, you might be wondering if you will lose your car to repossession if you file. The answer to this will depend on numerous factors, and here are several important things you should understand about bankruptcy and car repossession.

It will depend on the branch you use

With all bankruptcy issues, it is important to know that the branch you are using will affect things in different ways. If you use Chapter 7, you have more of a risk of losing your car to repossession, and this is because Chapter 7 often requires giving up things you own. With Chapter 13, you do not have as much of a risk, as trustees do not take assets away from people who use this branch of bankruptcy.

You will not lose it immediately no matter which branch you use

Secondly, you should know that you will not lose your car to repossession right away no matter which branch of bankruptcy you use, and this is due to the automatic stay. The automatic stay will stop your lender from pursuing a repossession, but this court order does not stay in effect permanently. In a Chapter 7 case, it ends when the trustee offers the discharge for your case. In a Chapter 13, it ends when you complete your plan. Therefore, the automatic stay will give you a little bit of time to figure out what to do about the situation.

You would need to complete a reaffirmation agreement if you use Chapter 7

If you are using Chapter 7 and want to avoid a repossession, you would first of all have to get current on the car loan you have. Secondly, you would need to fill out a reaffirmation agreement and send it to your lender. If your lender approves it, your car will not be repossessed at this time.

You would need to make all payments if you use Chapter 13

To avoid a repossession in Chapter 13, you would need to make every payment required in your repayment plan. Missing a payment could lead to a dismissal of your case, and if your case is dismissed, your car lender can begin the repossession process.

You do not have to lose your car to repossession in bankruptcy if you follow the rules and terms of your case. You can learn more about this by reaching out to a bankruptcy law firm.