Auto Repossession Before Bankruptcy

The other day I received a call where an individual asked me whether filing bankruptcy would allow for a car that has been repossessed to be returned. Although my response probably failed to satisfy the caller (the usual attorney response of it depends), here is what is required in California (at least how the courts have viewed the law).

Background

In most vehicle contracts the lender retains a right to repossess a vehicle if the borrower fails to make the scheduled payments. With many contracts, this repossession can be done outside of any court proceedings.

However, once an individual files for bankruptcy many of the rules change. For one, an automatic stay is implemented. This stay prevents most actions against the debtor (individual that files for bankruptcy). Specifically, the automatic stay strictly prohibits any lawsuit or repossession against a debtor that is delinquent on car loan payments. Any repossession after a bankruptcy petition is filed constitutes a violation of the automatic stay, with the repossession void and of no effect. In that case, the lender would be immediately required to return the vehicle to the debtor.

Effect of Bankruptcy on Prepetition Repossession

Section 542 of the Bankruptcy Code requires that entities in possession of “property of the bankruptcy estate” are generally required to turn the property over to either the trustee (in Chapter 7) or the debtor (in Chapter 13). This big sticking point then for this turnover requirement is determining what is “property of the estate.”

Section 541 of the Bankruptcy Code defines property of the estate. This definition includes “all legal or equitable interests of the debtor in possession as of the commencement of the case.” Basically this definition states that whatever rights the debtor has at the commencement of the case continue in bankruptcy. As for the vehicle that has been repossessed, the court has to discover what rights a debtor had when the bankruptcy case was filed.

These rights are determine by state law (California State law). Under the California Civil Code (section 2983.2), a debtor has the right to redeem a repossessed vehicle up until the date the car is sold by the repossessing lender.

Two recent cases have come to different conclusions as to whether turnover of the vehicle is required upon the filing of the bankruptcy petition. First, in a case from the Southern District of California (In re: Fitch, 1998), the bankruptcy court held that while a repossessed car is property of the estate, the right to possess the car was transferred to the lender prior to the filing of the bankruptcy petition. The court interpreted the statutes to mean that the automatic stay freezes the positions of the debtor and creditors. Thus, the lender had the right to maintain possession. The court did state that a vehicle could be returned to a debtor upon the debtor’s giving of adequate protection. In most cases adequate protection means the establishing of proof of insurance and proof that the debtor will be able to make the regular payments on the car.

In the Northern District of California (In re: Cortez, 2010), the Bankruptcy Court interpreted the Bankruptcy Code, and specifically the section on the automatic stay, to mean that a “knowing retention of estate property violates… the automatic stay.” Because a debtor has the right to redeem until the date of a sale by the lender, the vehicle remains part of the estate, and subject to turnover. In this case, the debtor provided adequate protection to the secured creditor. However, the court seemed to say that it was not necessary for turnover.

What to do?

If your car has been repossessed, and you want to make sure you retain possession, bankruptcy may be a solution if you are not able to pay the balance before a lender’s sale. However, while the Northern District seemed to state that adequate assurance is not necessary for turnover, it will ultimately be necessary to avoid a lender’s motion for relief from the automatic stay. Be prepared to show (a) insurance, (b) regular and sufficient income, and (c) an ability to pay for the vehicle.

Guaranteed Auto Credit From Auto Net Credit Centers

Presently, there are many Auto Net Credit Centers that auto finance endorsements from instant Easy Credit Auto marts in the USA. Now you can even get an okay for Instant Car Loans from banks, credit unions and even from any local auto mart even if you have a poor credit balance. After completion of the auto loan endorsement, an agent from the department will immediately process your request. The representative will then contact you and discuss what you need to settle on which car loan option is suited best for your circumstances.

Easy Credit Auto sales are meant for people who face credit problems that do not meet the criteria for loans from banks and credit unions. This online car loan application is completely secure and if anyone is planning for a car loan, these auto credit centers are the right place as they have made it easy for anyone in the United States with credit problems to buy a car. There are many reasonable auto credit loan choices for consumers with fair, poor, no, slow and low credit scores.

An instant credit approval depends on what information the applicant submits online. All information, for example where employed and salary has to be verified. The applicant should be as precise as possible while completing the online easy credit application form. If any part of the information submitted in the application does not match with what is verified, the instant car loan authorization will be annulled.

So if the salary, employment and all other information submitted is correct after verification, the guarantee of the car loan will be approved. All approvals are based on what is affordable on a monthly basis. Money down will be required if the car that is bought is more than the approval amount.

While applying for a Guaranteed Car Finance agreement, the applicant should set realistic expectations like selecting the right car, as this is the most vital part in getting a Guaranteed Car Finance loan approved. As soon as the auto mart sets a financial plan for the applicant, they usually give the nominee a choice of three or more cars. Once the selected applicant picks a particular car, he/she should have it thoroughly checked by an ASE Certified Master Mechanic.

The next immediate thing to reflect on is the Guaranteed Auto Credit as the loan term should preferably be kept as short as possible. If there is enough space in your budget once you’ve cut down on the term, consider the purchase of GAP insurance and/or an extended warranty to cover the length of the financing contract. In particular, the first auto loan with poor credit will have the interest rate quite high, so the shorter the term is kept, the less the interest paid.

So now with so many Auto Net Credit Centers an easy auto loan approval online is easily available. This premier EZ application will take just a minute to complete. All information submitted by the consumer is kept completely private and guaranteed secure.

Drive Away The Car Of Your Choice!

Car financing rates vary from one lender to another. The online option proves to be the best option if you are keen on securing a car loan at a favourable rate of interest. It is also the most convenient way and does not involve too much of paper work and other formalities. Moreover, the lending institutions offer such car loans even to people with a bad credit history.

Want to go in for a used car? Then, opt for UK used cars and get the best deal on car loans. It is a very popular option amongst borrowers residing in UK. We strive to offer you the best rates keeping in mind your financial position. A favourable credit score will definitely help you get a better deal on the car loan. We have helped scores of borrowers in the past. You can benefit too. No matter whether you have CCJ’s, arrears, defaults or missed payments, you can still opt for UK used cars!

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Car Loan Insurance – Protect Your Car against Damages!

Before signing any loan contract, it is advisable that you have ample information on hand. This will guide you to take a suitable decision. Getting a car loan is not difficult. But once you get the car loan, it is important that you also protect it from any mishap or damage. If you purchase a minimum amount of liability coverage to protect your car, you will be trouble free in case you car is damaged. You need to be careful while choosing your auto or car insurance just as you would be while searching online for your car loans for best rate.

Doing some research will help you get a favourable deal on the car loan insurance. Don’t jump at any offer that comes your way. Tread carefully. The online option also gives you the option of choosing the best car insurance. One can possibly get a lower auto insurance quote with an inexhaustible online resource to search from. It is no more a tedious task to find cheap auto insurance rates online. The online option enables you get quick financial assistance in a short period of time.