If you are struggling to pay your debts, it may be in your best interest to file for bankruptcy in a Minnesota court. Doing so may prevent property such as a home or car from being seized by creditors. However, there is a chance that your lender may repossess your car before you are able to file for bankruptcy and receive an automatic stay.
When can a lender take your car?
As a general rule, your car may be repossessed as soon as you miss a single payment. Typically, you have missed a payment if it isn’t made at least 30 days after the original due date. Assuming that you haven’t obtained an automatic stay by filing for bankruptcy, a representative of the lender may come to your home, office or another location to physically take the vehicle. The loan agreement that you signed when you bought the car will have more information as to the lender’s rights in the event of a default.
What happens if your car is repossessed?
If your car is repossessed, you may be given a chance to get current on your account before the vehicle is sold at auction. In the event that the car is sold at auction, you must generally be given a chance to bid on it. It’s worth noting that you may be responsible for paying any deficiency that remains after the car is sold. A deficiency simply means that the car was sold for less than your outstanding loan balance.
If you have missed a car loan payment, it may be helpful to contact your lender immediately. Alternatively, it might be a good idea to file for Chapter 7 or Chapter 13 bankruptcy before your lender takes its property back.