Will Filing for Bankruptcy Stop a Repossession?

Your car is an important asset because you need transportation to and from work, a way to take your children to school, and the means to run errands. Without a vehicle, you could lose your job, and your family may suffer. However, it is easy to get behind on car payments when you experience a temporary reduction in income or other financial hardship. If you are in danger of vehicle repossession, call our Georgia bankruptcy attorney to discuss how you can stop repossession with a bankruptcy filing.

The Repossession Process In Georgia

When you purchase a vehicle with a loan, the lender places a lien on the vehicle. If you fail to pay the loan payments pursuant to the terms of the loan agreement, the lender has the legal right to repossess the vehicle.

In Georgia, a lender is not required to obtain a court order or file a lawsuit to repossess a vehicle. The lender can have the vehicle towed from your home, place of employment, or a parking lot at the mall. If a lender is not able to repossess the vehicle, it may apply to the court for assistance.

Once your vehicle is repossessed, the lender must provide notice that you have 10 days from the date of the repossession to redeem your vehicle. To redeem the vehicle, you must pay the full balance of the loan to the lender (or at least the amount you are behind on, including costs of repossession and daily storage fees). After 10 days, the lender may sell your vehicle and apply the proceeds to the loan and any costs of the repossession. If the loan is not paid in full, the lender can take further legal action to collect the unpaid balance from you.


When you file a Chapter 7 or Chapter 13 bankruptcy petition, the automatic stay provisions of the Bankruptcy Code protect you from certain actions by creditors. Creditors are prohibited from taking any further action to collect a debt without court approval. Therefore, filing a bankruptcy case stops repossession, foreclosure, wage garnishments, collection lawsuits, and other actions to collect a debt.

A Chapter 13 bankruptcy filing can help you keep your car without paying the past due payments at one time or the balance of the loan in full. With a Chapter 13 case, you must also file a bankruptcy plan which details how you intend to reorganize your debts. Your plan proposes to pay the Chapter 13 trustee a set amount each month to pay your debts. In most cases, unsecured creditors receive a small percentage of the full amount owed on the debt with the remaining balances being discharged at the end of your case. The bankruptcy plan payment may also include some secured debts, including car loans.

Your Chapter 13 plan gives you the chance to keep your car by stretching out the payments on the loan for up to 60 months. In some cases, you may change the terms of the loan to make them more favorable. If the loan originated more than 910 days before the filing of your bankruptcy petition, you can file a motion to value the vehicle at the fair market value. You may also be able to lower the interest rate on the loan. Any unpaid balance is treated as an unsecured debt and discharged at the end of your Chapter 13 case.

If you file a Chapter 7 bankruptcy case, the bankruptcy filing stops the repossession temporarily. With a Chapter 7 case, you must pay the past due balance in full and resume regular payments to keep your vehicle. The lender may also require you to sign a reaffirmation agreement. Therefore, a Chapter 7 case may not help you keep your vehicle, but it can delay the repossession, prevent the lender from seeking any unpaid balance on the loan, and get rid of your unsecured debts. With willing creditors, you may be able to renegotiate some of the terms of your loan.


You can stop repossession and get rid of unsecured debts by filing a bankruptcy case. Do not wait until your vehicle is towed away in the middle of the night or while you are at work. Contact us today for a free consultation with an experienced Georgia bankruptcy attorney.