What can you do when your car is going to be repossessed in New York?

Definition of ‘repossession’

Repossession is the act of a creditor of taking back actual physical possession of a motor vehicle.  Often when a person buys a car, he pays for it installments as he does not have the entire purchase price on hand.  The buyer makes a down payment or an earnest payment, and he promises to pay the rest of the purchase price of the car in equal monthly installments. The creditor or car seller will usually demand that a lien be established so that the car can answer for the debt.


When can a creditor repossess a car?

In order to ensure that the purchaser does not just vanish with the car and leave the purchase price unpaid, the seller or the creditor will ask that the car be the security for the repayment of the money loan.  This means that in case the buyer fails to make the monthly payment on the car, or fails to make monthly payments on time, the creditor or car seller can take back possession of the car as payment for the cash loan.

In New York, a creditor can take physical possession of a car by having it towed and then taking off the license plates and surrendering the plates to the police.  If the creditor cannot take the physical possession of the car as he cannot find it, he will have to go to court and ask for an order from the court to take the car.


How can a debtor defeat repossession?

The buyer of the car may be laid off, he may be fired from his job, he may be injured or he may fall ill such that he cannot work or make payments on his car. One way by which the buyer can defend himself against the repossession of his car is by filing a petition for bankruptcy. This option is open only to those buyers of cars who cannot make payments on their debts as their debts fall due because they lack sufficient income to pay off their debts.


An automatic stay in bankruptcy stops repossession

Filing a petition for bankruptcy effectively stops a creditor from repossessing the debtor’s car and from suing the debtor to collect on the debt he owes. This is called an ‘automatic stay’. Ask a New York Bankruptcy attorney about an automatic stay in order to prevent your car from being repossessed.

If you file a Chapter 7 bankruptcy, a car can be one of the kinds of properties that you can ask to be exempted from bankruptcy.  This means that you can list your car and ask that it be exempted.  This means that it cannot be taken from you and sold off to satisfy your debtors.

If a Chapter 13 bankruptcy is filed, the debtor can include the debt on the car in the repayment plans. As long as the debtor-in-bankruptcy keeps up payments as he has proposed in the payment plan his car will not be repossessed.


We at the Maxwell Law Firm PLLC, assist in client debt settlement, foreclosure defense, tax collection defense, filing for Chapter 7 and 13 bankruptcy, and mortgage home loan modifications. Contact us and speak to our competent and experienced New York Bankruptcy Attorney so that you can get the debt relief you are seeking. Please give us a call at 718-701-0095 to discuss your options.