When is repossession unlawful?

What defines an unlawful repossession depends on different factors. For instance, was the item repossessed before a bankruptcy? If so, it's a lawful action. In this situation, the laws of the state will apply to the procedure. If an item was repossessed during a bankruptcy, two factors now come into play. The property that's listed in a schedule is subject to an automatic stay and a repossession is now illegal. If the item was not placed on a schedule, then the lender is free to claim the property.

Why Repossession is Illegal in Bankruptcy

The automatic stay is the first line of defense for a debtor. It allows for some breathing room from creditors while sorting out the bankruptcy. It also gives the trustee the necessary time needed to examine the estate of the petitioner and analyze if there are any items for liquidation in a chapter 7.

A repossession by a lender is considered to be a biased act by the trustee. The action of taking the item back deprives the other creditors of any chance of obtaining any money from the debtor. As a result, the lender is now open to lawsuits from the other creditors.

Get Legal Help

If you're experiencing troubles with finances and are concerned about repossession, it's time to talk to a lawyer. They're versed in state laws and can assist you in holding onto your property or get you into a bankruptcy in order to straighten out your financial life.