Vehicle Repossession and Chapter 13
If you have fallen behind on your car payments, then you are at risk for vehicle repossession. Even if you are just one day late making your monthly payment, the car loan company (your lender) has the legal right to repossess your vehicle. Lenders are not under any legal obligation to give you extra time to make your payment. Additionally, if you make a partial payment instead of the full amount owed in a particular month, you are also at risk for vehicle repossession. The unpaid portion is considered late.
Trying to Reach Out to Your Lender
Reaching out to your lender during a time of financial distress is a good idea, but may not always make a difference in regards to the lender repossessing your vehicle. Sometimes a lender will be willing to work with you to come up with a solution to your late payment(s) after you explain your situation. Approaching the lender before your situation spirals out of control is important. If you have recently lost your job, for example, it is best to contact the lender and explain what is going on when this first happens, rather than waiting until you miss several payments.
Consider a Chapter 13
If you are unable to make arrangements with your vehicle lender to catch up the payments, and do not want to risk the lender repossessing your vehicle, a Chapter 13 bankruptcy may be an options for you. A Chapter 13 allows you to pay off the loan during the course of a three to five year plan.
In most circumstances, a Chapter 13 will also obligate your lender to return your vehicle to you if it has already been repossessed. Additionally, under some circumstances, Chapter 13 may allow you to pay back what the vehicle is worth, at a reduced interest rate vs. what you actually owe on the loan. This can oftentimes result in a significant savings.