In most cases, if car loans are not paid, the lender will lose money. To avoid losses on defaulted loans, creditors hire help to repossess cars. While it should be common knowledge, it bears repeating that car loans are legal contracts between a borrower and a lender so, under the terms of the contract, the lender has the legal right to repossess the car. For those who are behind on their car payments, a bankruptcy filing through we may be the easiest way to keep the vehicle.
Creditors’ Rights in Repossession Cases
Once a repossession occurs, the creditor can sell the vehicle to recover some or all of the loan’s outstanding balance, and when this happens, they must wait for ten days to allow the borrower to bring the loan to current status. If Chapter 13 bankruptcy is filed within this period, or if the car has not been sold, the resulting stay requires that the vehicle be returned to the borrower.
Car Sales and Deficiency Judgements
If the creditor repossesses the car and they sell it for less than what’s owed, the creditor may ask for a deficiency judgement against the borrower, which allows creditors to sue borrowers for the difference between the amount owed and the amount for which the car was sold. It’s not out of the ordinary for creditors not to follow protocols when repossessing and selling cars and, for this very reason, it is important for borrowers to work with bankruptcy attorneys who can protect their rights.
Protecting a Vehicle in Bankruptcy
The treatment of financial contract in court can be affected equally by what parties do and what’s not done; for instance, if a creditor regularly took partial or late payments, the estoppel principle means that their acceptance of the issue can be interpreted as a change in contract terms. If a car is then sold without proper notification of the borrower, that person may be able to hire a repossession attorney and sue their creditor.
Car loans allow people to get vehicles they would not otherwise be able to afford, but defaulting on a loan can have serious consequences including repossession of the vehicle. By hiring a repossession attorney, a borrower can put a stop to illegal repossession efforts and possibly keep their car.
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