Legal Services by Randall A Fischer
Can I keep my car if I file for Bankruptcy?
If the Bank repossesses my car, do I still owe any money?
The short answer to this question is: it depends. When the vehicle was originally purchased via a loan, the purchaser enters into a security agreement and a promise to repay the loan. The security agreement covers the vehicle in the event of a breach. The lender, in the event of a breach, can exercise options contained within the agreement to satisfy the security agreement. For example, if you do not make your payment, the lender can repossess your car. There may be other grounds for repossession contained within the security agreement so it is important to read all documents before signing anything.
The issue of whether or not you will still owe the lender money is contingent upon the money owed on the account versus monies received for the sale of the vehicle. The repossessed vehicles are usually auctioned. The money received is applied toward the balance due on the promissory note. In the event the amount exceeds the balance due and any costs associated with the repossession (as agreed upon in the security agreement), then the owner would be entitled to the balance. Otherwise, there is a shortfall also known as a deficiency. The lender can sue the borrower for this deficiency as well as for any expenses associated with nonpayment as detailed in the note. This is why it is important to read everything before signing.
Is there any way to avoid this potential situation? One possible solution would be to contact the lender prior to repossession. If you are facing a short term cash flow short fall, contact your lender and see if they are willing to allow for an interest only payment schedule until you are able to get back on your feet. If you are unable to make those payments, contact the lender and see if they would be willing to waive any deficiency in lieu of your cooperation. Understand, the lender does not have to do anything, but it doesn’t hurt to try. Second, any amounts forgiven could be subject to a 1099 for the lender and realized as taxable income.
If the potential deficiency is quite large and you have other pressing financial situations, you should contact Jupiter FL Lawyer, a bankruptcy lawyer and review your options.
Our Services
Bankruptcy
Civil Litigation
- Breach of Contract
- Negligence
Mediation
When you are in mediation, think about other less linear resolutions to resolve the dispute. It is one of the true benefits of mediation: Thinking outside the box. Also, do not be too quick to write off the process. It usually did not take a short time to get you in the situation where you needed mediation; don’t expect it to be resolved in 15 minutes. You have time. If you need to take a break, request a break. Trust the process and give it a chance.
My Law offices are located in Stuart, Port St. Lucie and Jupiter Florida. Call for a free consultation.
Hours of Operation
Mon-Thur: 8:30-5:00 pm
Fri: 8:30-3:00 pm
Law Offices of Randall A. Fischer, P.A.
Email: rafischerattorneyweb@gmail.com
Website: http://www.rafischerattorney.com/
Location: 2100 SE Ocean Blvd, Ste 203 Stuart, FL 34996
Phone: 772-463-7737
Facebook: https://www.facebook.com/rafischerattorney?ref=hl