When you finance the purchase of a physical piece of property like a car or furniture, included in the sales papers is an agreement between you and the seller or the lender that states that the property is collateral for the loan. This means if you fall behind on the payments or default on the loan, the creditor can take from you the property you purchased. According to repossession laws in Utah, this is called repossession – they possessed the item before you and can re-possess it if you do not pay.
You may have heard stories of people going into the grocery store and coming out to find the car gone. We even had a prospective client’s car repossessed from our parking lot while they were in speaking with us about filing bankruptcy. Generally, the creditor will try to repossess the collateral at night to avoid an ugly scene. Repossession laws in Utah allow the creditor to send to someone take the property without warning. They can just take it if you are behind in payments. The creditor cannot break the law or disturb the peace to take your property, but they can take it. You should be aware that if you are at least one payment behind on your car, you are in danger of having it repossessed.
Now for the good news. Filing a chapter 7 or 13 bankruptcy will stop the repossession process immediately. Even if the creditor is standing in the driveway ready to take the car, they cannot take it if you have filed bankruptcy.
Filing a chapter 13 bankruptcy can protect you against repossession in two ways. First, if the creditor has already repossessed your vehicle, if you file bankruptcy within 10 days from when they repossessed the vehicle, we can usually get the vehicle back. Second, once you have filed a chapter 13, you can restructure the debt so that you can pay off the loan under more lenient terms.
If you are behind in payments on your car or other property, you are in danger of the creditor repossessing your property. You have other things to worry about. You don’t need to be fearful of a creditor repossessing your car. Call us today to set up an appointment for your free consultation so that we can show you how a chapter 13 bankruptcy can save your property and, more importantly, preserve your peace of mind.