When you finance a vehicle, the lender keeps a lien and the right to take the vehicle if you default. Indiana law allows self-help repossession: the lender can send an agent to take the car from a driveway, a parking lot, or the street without going to court, as long as the agent does not breach the peace. You cannot hide the car or physically stop the agent; doing so creates problems that are worse than the repossession. What you can do is act before it happens, or act fast after.
The lender must give you notice before selling the vehicle, usually at auction. The sale price is applied to the loan, and you remain liable for the deficiency: the balance, plus repossession and sale costs, minus what the auction brought. Deficiency balances on vehicles are routinely thousands of dollars, and lenders sue to collect them. A repossession does not end the debt; it adds to it.
Filing a Chapter 13 before the vehicle is taken invokes the automatic stay, and the lender cannot repossess. If the vehicle was already repossessed but not yet sold, the lender can generally be required to return it once the case is filed and the plan provides for the loan. The plan then restructures the loan: the arrears are spread over the plan, and depending on how old the loan is, the plan may pay the vehicle’s current value rather than the full balance, at a reasonable interest rate rather than the subprime rate on the contract.
In a Chapter 7 you have three choices. Reaffirm the loan and keep the car by continuing the payments; redeem it by paying the lender its current value in a lump sum, which can be financed; or surrender it and discharge the entire balance, including any deficiency. If a car has already been repossessed and sold, a Chapter 7 discharges the deficiency so the lender cannot sue for it.
Lenders rarely repossess after one missed payment, but a second missed payment or a lapse in insurance can trigger it, and they do not warn you. If you are behind, call before it happens. The options are wider and cheaper before the repossession than after.
The first meeting is free, in person at either office or by phone or video. Bring whatever you have: bills, collection letters, pay stubs, a tax return if it is handy. We go through the whole picture, tell you whether bankruptcy is the right tool and which chapter, and quote a flat fee with a payment plan. Nothing is filed until you are comfortable with the plan. More about how we handle bankruptcy cases.
Admitted to the Indiana bar at 24, the youngest licensed attorney in the state at the time, Miguel pairs that early start with more than fifteen years helping Northwest Indiana families through injury claims and bankruptcy.
Often, yes, if you file a Chapter 13 before the lender sells it and the plan provides for the loan. Time is short; auctions can be scheduled within weeks.
Indiana permits repossession from a driveway or open area without a court order, as long as the agent does not breach the peace, such as breaking into a locked garage or using threats.
Usually, yes. The deficiency balance after the auction, plus costs, remains your debt. Bankruptcy discharges it.
Call either office or send a message. We will tell you plainly whether bankruptcy is the right tool, and which one.