Can I Get My Car Back Through Bankruptcy in New York City?

Can I Get My Car Back Through Bankruptcy in New York City?

The situation for many of our financially distressed clients in New York can go from bad to worse when their automobile is repossessed right before filing for bankruptcy. It’s unfortunate timing to say the least, but the good news is that if you have had your car repossessed you may be able to get it back by filing for Chapter 13 Bankruptcy protection.

For most people a car is completely necessary for day to day life.  You need a car, and the bankruptcy courts recognize this basic necessity.  If your Chapter 13 repayment plan is negotiated to pay your auto lender back for the overdue amounts as well as monthly payments going forward then your bankruptcy attorney may file a “turnover” motion forcing your lender to return your car to you.  Before this can happen however you are required to make payments of “adequate protection” to your lender from the time of your bankruptcy filing to the time of your Chapter 13 repayment plan’s official confirmation.  These payments give the auto lender compensation for any depreciation in the car’s value during the time your Chapter 13 repayment plan is being negotiated and confirmed.

Depending on your particular financial situation your attorney may not even need to file the motion of turnover to get your car back.  If the “adequate protection” payments have been made the lender might willingly return the car once it sees the confirmed repayment plan.  If you are filing Chapter 13 in New York you may also have the option of a “cramdown”.  A cramdown will allow you to pay your lender on the market value of the car, not on what you actually owe on the loan.  If you have already been considering bankruptcy protection but have now had a car repossessed it is important to speak to a bankruptcy attorney.  Various options exist to help you get your car back right away when you file bankruptcy but you need to act quickly.

While it is possible to get your car back when you file Chapter 13 in New York it may not always be in your best long term interests.  We try to help our clients avoid any terms that could get them into more financial trouble.  Sometimes it is best to let your current car go.  The debt you owe on the vehicle would be discharged and you will have an opportunity to purchase a more affordable car going forward.  Auto lenders understand that if you have filed bankruptcy you no longer have toxic debts and bad loans that would prevent you from paying your car loan.  Since you can’t file bankruptcy again for several years, most lenders will feel confident in offering you a loan for a reasonably priced automobile.

If you have serious debt trouble and have just had your car repossessed then you need to find a qualified bankruptcy attorney to help.  Our firm offers affordable bankruptcy assistance for all New Yorkers.  We maintain a 99% Chapter 7 Bankruptcy discharge record in New York as of 9/31/16.  If you live in New York City arrange a free consultation with the Law Offices of William Waldner online or by calling 212.244.2882.

This article is intended for educational purposes only.  By reading this article no attorney-client privilege has been created.