Does bankruptcy stop car repossession?

When a person is severely in debt, that person may resort to selling off personal property in order to either repay debt or make ends meet. While many are willing, if reluctant, to part with items like jewelry or electronics, many understandably fear losing their home or car. Asset forfeiture is a threat to Mississippi residents who are in over their heads financially. Fortunately, there are legal options available for avoiding these scenarios.

In the case of a potential vehicle repossession, a debtor can utilize personal bankruptcy as a means of stopping asset forfeiture. In many cases declaring bankruptcy will put an immediate end to not only collection efforts, but also to repossession actions. In some cases, a Mississippi bankruptcy attorney can help a debtor get his or her car back if it has already been repossessed. However, legal action must be taken within 10 days of the repossession itself.

Some may be hesitant to consider bankruptcy as a way to stop repossession due to the damage it does to a person's credit score. However, an auto repossession can also negatively impact a person's score. Both bankruptcy and repossession can stay on a credit report for seven years, though a bankruptcy's credit score presence may be a few years longer in some instances.

Some may believe letting a repossession go through is simply more efficient than filing bankruptcy, but a repossession doesn't necessarily release a debtor from their vehicle-related financial obligation. When a car is taken back by the lender, it is usually sold at an auction. If it is sold for less than the balance owed by the debtor, the debtor will have to pay the difference. In such cases, the debtor no longer has a vehicle, but still owes money. Under bankruptcy, vehicles can be kept and some debts are either eliminated or restructured into manageable payments.

Source: Bankrate, "Have car repossessed or file bankruptcy?," accessed Nov. 30, 2014

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