How can you legally stop your car from being repossessed? One solution is Chapter 13 bankruptcy. Chapter 13 is a repayment plan filed in bankruptcy court which allows income earners to restructure debt. In a Chapter 13 plan, the iconic "repo man" must immediately stop any collection efforts to repossess your car upon the filing of the Chapter 13 papers in Bankruptcy Court.
In order to qualify for Chapter 13, you must have a source of income and demonstrate to the bankruptcy court that you can afford to make future payments. This is why Chapter 13 is designed for individuals and families with a source of income. If income cannot be demonstrated then Chapter 13 should not be a consideration.
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Once the Chapter 13 papers are filed in Bankruptcy Court, the repossession company, "repo man", or whom ever is seeking to repossess the vehicle, must comply with the payment plan that is approved by the Court. The finance company must accept those newly proposed terms because it is ultimately ordered by the Court.
Since the court ultimately approves the plan, the finance company has virtually no authority. However, the finance company can object to your plan if they determine that their rights according to bankruptcy guidelines have been overlooked. That is why it is very important to ensure that the chapter 13 papers are prepared properly. If the finance company objects to the plan, they will likely file papers and court and possibly seek to negotiate better payment terms. In most instances, this will not happen.
Chapter 13 can also be utilized as a debt consolidation tool, since it allows all types of bills and debts to be included into the plan. It also allows most debts to be reduced. Chapter 13 allows outstanding balances to be reduced such as with credit cards, car loan balances, other unsecured or secured loans and utility bills. In some instances, Chapter 13 has allowed a second or "junior" mortgage to be reduced. This is not yet widely practiced within all bankruptcy district courts, but reducing a second mortgage is a realistic possibility.
Unfortunately, chapter 13 can be very costly as attorneys charge an average of $3,500 to $4,500 to prepare the paperwork. The legal fees alone can keep Chapter 13 out of reach for thousands. I assist individuals and families successfully file for Chapter 13 bankruptcy on their own without an attorney. Bankruptcy court recognized someone filing on their own without an attorney as "pro se".
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