CAN WE STOP OUR CAR OR OTHER POSSESSIONS FROM BEING REPOSSESSED?

When you get behind on payment of a debt which is secured by a security interest or lien on your car, furniture, jewelry, or other personal items, upon repossession, the items are sold and proceeds credited against the amount you owe. If the sale proceeds are equal to or greater than the debt, you have no further liability. If the sale proceeds are less than the debt, which is most often the case, you owe the difference, commonly called "the deficiency." Like any other debt, the creditor can take whatever collection actions it deems appropriate, including filing a lawsuit against you.

It is important to understand that in automobile repossessions, for instance, the car is not put back on the dealers lot and sold retail to another user. These sales are generally done at auctions only auto dealers can attend. These dealers are buying at resale and often purchase cars for a fraction of their actual value, with you being stuck for the difference.

The filing of a Chapter 7 or straight bankruptcy cancels this debt so that you have no further obligation to pay if you want to give up the item. If you want to keep the item you can redeem it - which means buy it back for cash for its present value even if less than the debt owed or you may stop the repossession, cure any arrears, and retain the item paying the regular monthly payment. In some circumstances, if there is a judgment lien on your home, or if the creditor has a non-possessory, non-purchase money lien on certain items, the lien or security interest may be canceled by the bankruptcy court. It will be as though the creditor never had a lien on those items. You can protect your property.