Repossession: What You Need To Know
For many of us, the fear of repossession of a vehicle is the first thought we have when debts begin to pile. And, when a car is repossessed, or a home faces foreclosure, you may wonder what steps you should take. If you are worried about debt and repossession and live in Columbus, Ohio, The Jones Law Firm has answers for you.
What is repossession?
Repossession occurs when a borrower fails to pay back the amount owed to a lender for a vehicle. In Ohio, the buyer must sign a security agreement which acknowledges that should he or she not pay back the loan, the lender can repossess the vehicle.
In general, creditors allow for grace periods to repay late or missed payments. If there is a stipulated grace period within the signed agreement, the lender must abide by it.
Once that grace period has been met, the creditor must send a notice of default within five business days. The notice must include the amount which must be paid for the debtor to regain the vehicle. Such payments must include past due bills, late charges, expenses, and a deposit.
The lender must send another notice 10 days before the sale of the vehicle. This marks the time and place the sale will occur at as well as the minimum price for the vehicle. In addition, the final notice will include information about what payments may still be owed even after the sale.
In general, if the debtor files for bankruptcy before the sale, the repossession may be stopped.
Can bankruptcy help?
Because a car will often sell for less than what is owed on it during a repossession, the debtor will still be required to pay. However, there are potential ways that you can regain ownership of the vehicle.
If you decide to file bankruptcy, Chapter 13 will offer more options for regaining ownership. A Chapter 13 repayment plan makes it possible to regain ownership by repaying debts, however:
- You must act quickly. That 10-day period we mentioned before is important here. When you receive that notice, you must act quickly. This is because once the car is sold, filing a Chapter 13 case does not get the car back.
- You have to make payments. In your Chapter 13 bankruptcy case, you will be required to pay back the entire loan as part of your repayment plan. If you will not be able to make those payments, you are likely to lose the car.
If you cannot make your payments, you may have options under Chapter 7 bankruptcy.
Though many debts are discharged after a Chapter 7 filing, secured debts are not. A lien on a car is considered a secured debt that you must pay. While bankruptcy may buy you some time, it does not guarantee you will be able to keep the car. If you cannot make payments, the car is likely to be repossessed.
Repossession and Ohio Bankruptcy: The Jones Law Firm
You need your vehicle to get to work so you can pay down your debts. But when you are facing repossession, you may not know what to do. If you have debts you cannot pay and are facing repossession of your vehicle, you need The Jones Law Firm. We will evaluate your specific case and see what we can do to help. Contact the Columbus, Ohio bankruptcy attorney today.