How does bankruptcy affect repossession?

It is not a myth… bankruptcy can help individuals who are facing threats of repossession.

Bankruptcy, Repossession, And Protection—How It Works

If you file for bankruptcy, you will receive an Automatic Stay. This refers to legal protection against collection efforts. This protection does not go into effect eventually; it goes into effect immediately. Since repossession is clearly a collection effort, creditors are not allowed to reclaim the property of bankruptcy debtors.

Both Chapters 7 and 13 offer protection in the form of the Automatic Stay. However, in the long term, they affect repossession efforts differently.

If you file a Chapter 7 bankruptcy and you want to keep possessions that your creditors wanted to repossess, you may be allowed to do so. This involves signing a reaffirmation agreement and finding a means to overdue and future payments.

When filing a Chapter 13 bankruptcy, a person usually finds more advantages with regards to endangered property. This type of bankruptcy is specifically designed to allow individuals the opportunity to restructure debt. Therefore, not only will you prevent repossession, you may be able to negotiate a lower balance on the property, eliminate or reduce the interest, and you may be given the opportunity to make lower payments over a span of several years.

Legal Assistance

If you are at risk of having your property repossessed and you are considering bankruptcy, you should consult with an attorney. Access to competent advice that allows you to keep as many of your belongings as possible is one of the many benefits of working with an experienced bankruptcy attorney.