A car repossession can happen to anybody.

You may have lost your job. Perhaps you’ve been off work due to an illness or injury. Maybe you had an unexpected expense, or have been through a divorce and have less income. These things may cause you to fall behind on your payments. Falling behind on payment can put you in jeopardy of having your car repossessed. Many people believe that you have to be at least 2 payments behind to have your car repossessed. However, creditors can repossess your car when you are late making just one payment.

When you realize that your car payments are now too high, it’s time to do something. That something may be filing Chapter 13 bankruptcy.

If you feel that if you can reorganize your debts into a manageable monthly payment, a Chapter 13 bankruptcy may be the solution for you to regroup, get back on track and keep your car. The most important thing is to be sure that your vehicle is not repossessed before you file Chapter 13.

Some people file Chapter 13 bankruptcy (often called the “Reorganization Bankruptcy”) to stop repossession of their vehicle. When the Chapter 13 petition, along with a Chapter 13 Plan to repay your debts over a period of time, is filed, the automatic stay immediately goes into effect. At that point, the creditor cannot repossess your vehicle. Your Chapter 13 Plan will include paying the debt owed on your automobile, along with payment on your other debts.

After you file Chapter 13, you will go to a short hearing with your attorney. This meeting is where your repayment plan is presented to the Chapter 13 Trustee and the court. If your plan is accepted (“Confirmed”), you make regular payments from your paycheck each pay period to the Chapter 13 Trustee to repay your debts. When you purchase your vehicle, the creditors generally require that you maintain full coverage insurance on your vehicle. Note that during this process, you still need to maintain full coverage insurance on your vehicle, or the creditor will object to your plan is confirmed and most likely be granted the ability to be able to repossess your car.