What a lot of people don’t realize is that you don’t have to give up everything you own when you file for bankruptcy.
There’s an unfortunate misconception that bankruptcy is a punishment of some sort, when in reality, it is not. Bankruptcy was designed to help people get out from under smothering debt and back on their feet as functioning members of society. People can’t do that without a roof over their heads and a reliable way to get to their jobs.
This is why “exemptions” are written into bankruptcy law. Exemptions are types of property that can’t be seized by lenders or creditors while a person is undergoing bankruptcy. For instance, if you were under financial strain and had missed a few car payments, you would be worried about having your car repossessed. Once you filed for bankruptcy, an “automatic stay” was issued. An automatic stay is an immediate injunction that prevents creditors from trying to collect on debts you owe them. This includes repossessing your car.
How Will My Lender Know I’ve Filed for Bankruptcy?
They will be notified through official channels, but to be on the safe side, have your attorney call them directly and inform them of the automatic stay.
Is There Any Way They Can Still Repossess My Vehicle?
Yes; the lender can file a “motion for relief from the automatic stay” with the court. If the court agrees with the lender, they are legally free to repossess your car.
How Will the Court Make Its Decision?
The court will take into account the value of the vehicle, the amount you owe on it, and how much you need it. For instance, if you use your vehicle in your occupation, the court will probably not approve the motion. But, if you own a Bugatti Veyron that you use to run errands, chances are the court won’t let you keep it. There’s a limit to how much the vehicle can be worth. This value changes from time to time, so to get the current maximum value, you’ll need to contact an experienced bankruptcy attorney at Cal West Law. Call (818) 446-1334 for a free consultation.