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If I file for Chapter 13, will my car be repossessed?

Not having the money to pay all of your bills or make ends meet can be a scary reality. Unfortunately, it's one thousands of Americans deal with every year. In order to maintain the financial status quo, many people rely on their car or vehicle to get them to and from their job. Without a vehicle, maintaining employment could be extremely challenging if not impossible in certain situations.

This is one of the main reason so many people ask about repossession when facing a financial crisis. Losing their vehicle could mean losing their job and subsequently more financial woes. As a result, we would like to address a commonly asked question:

If I file for Chapter 13, will my car be repossessed?

For many, the answer to this question determines whether or not they file for bankruptcy. Thankfully, the answer is more often than not: yes.

When a person files for Chapter 13 bankruptcy, an automatic stay is put in place that prevents creditors from collecting on debts, which includes vehicle repossessions. This stay remains in place until a bankruptcy judge decides on your case, giving you time to negotiate with your lender in hopes of working out a more manageable payment plan.

It's important to point out that even though the automatic stay of Chapter 13 prevents your vehicle from getting repossessed, you are still required to continue making payments on your vehicle, called "adequate protection" payments. A person living in Florida is required to make all adequate protection payments to the Chapter 13 trustee until a repayment plan is approved, explains the U.S. Bankruptcy Court for the Southern District of Florida.

Bankruptcy isn't for everyone but it could help you

The decision to file bankruptcy is one that requires careful consideration and guidance from someone who understands the complexity of the U.S. bankruptcy code. Although many see attorneys as an added cost that can be difficult to justify when facing bankruptcy, getting help from a legal professional is oftentimes better than trying to manage matters on your own. 

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