John Debtor had his vehicle repossessed several weeks ago and now wants it back.
He does not have all the money to pay the arrears upfront. He asks a bankruptcy attorney what, if anything, can be done.
The good news is that a chapter 13 bankruptcy case may get his car back with some caveats.
If the vehicle has yet to be sold in the auction then a chapter 13 debtor can file a motion for turnover under section 542.
But as part of that reqeust debtor has the burden:
- To prove that the secured debt is adequately protected which means proof of insurance
- To propose a feasible Plan to cure pre-bankruptcy arrears
- To prove he or she can make the regular monthly payment
- To pay the cost of repossession and storage charges, sometimes upfront.
These factors are covered by Judge Keir in the In re Massey where a debtor sought to have Chrysler return a repossed car.
Massey v. Chrysler Fin. Corp. (In re Massey), 210 B.R. 693, 696 (Bankr. D. Md. 1997)
The first three areas are easier for the debtor to handle. Insurance premiums can be paid monthly. With belt-tightening, you can probably propose a feasible plan as well as make monthly payments.
On the other hand, storage fees are harder to deal with because the storage facility is often a third party contracted by the lender to house the car pending a sale. That entity will not release the car unless the storage fees are paid. Therefore, more likely than not the debtor would have to pay those fees up front.
A chapter 13 bankruptcy offers the last option to save a repossessed vehicle and should be seriously considered for those whose financial position may have changed after the repossession took place.
A consultation with a knowledgeable bankruptcy attorney can help you determine if it is financially feasible and prudent to seek to save a repossessed vehicle.
