If I just filed for Chapter 7 and have gotten behind on my car payments in the last year. what is the likelihood that my car will be seized?

UPDATED: Jul 2, 2014

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If I just filed for Chapter 7 and have gotten behind on my car payments in the last year. what is the likelihood that my car will be seized?

I am debating making my car payment at all if they are going to take it anyway.

Asked on July 2, 2014 under Bankruptcy Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Legally, the lender will be able to repossess it: a bankruptcy filing does not terminate a lien or security interest, but rather only affects the ability to recover money from you. (That is, they can take the car, but can't sue you for the money you owe under the payment agreement.) The bankruptcy's "automatic stay" will delay repossession, but not stop it indefinitely; ulimately, the lender (or dealer or whomever has the lien) will be able to take the car if you don't make your payments and catch up on any arrears or shortfall.

Whether they will do that depends on how much the car is worth--it is worth it to them to repossess it? Likely it is, but this is a business, not legal decision: if they decide repossession is more trouble than the car, given it's make, model, age, mileage, condition, etc. is worth, they may choose to not repossess it.

You may wish to try speaking with the lender: they have the right and the power to agree to take less than full payment, to accept smaller payments, to forgive part of the debt, etc. If you  and they come to an agreement, you may be able to keep the car.

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