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If your car has been possessed, and you are about to file bankruptcy, it may make it difficult to get another one. Under Florida law, your lender can repossess your car without a court order even if you only miss one payment. Usually, the details of this arrangement are spelled out in the contract that you signed. Once they repossess the car, they can sell it and apply the proceeds to your loan. Once they have sold the car, there is nothing you can do.

If you have the money to get your car back and you have the money to file for bankruptcy, you should do so as soon as possible.

Once your vehicle has been repossessed, the lender must notify you and tell you how much you have to pay to get the car back. The lender must also provide you will notice of the date and time of the sale and information on whether the sale is public or private. Under Florida law, the lender can sell the vehicle at a private sale, without competing bids. If you have made less than 60% of the payments due, the lender can elect to keep the vehicle in exchange for the debt if you don’t object. If you object, the lender is required to sell the vehicle but can still hold a private sale with no competitive bidding as long as it is commercially reasonable, which generally means it was done fairly and in accordance with commonly accepted business practices. It does not require the lender to use its best efforts or to hold a public sale.

The lender, at its sole discretion, can allow you to bring the payments current (including paying the repossession costs) and reinstate the contract, but most will not. In most cases, the lender will require that you redeem the vehicle, or pay off the contract entirely, along with the costs of the repossession. To be sure you will get the vehicle back, you need to pay the redemption amount before the sale. If the sale is public, you can attend the sale and bid, but if you try to recover the car by bidding at the sale, there is no guaranty that you will not be outbid.

If you don’t have enough money to redeem the car and you need it to get to work or for family transportation, you may be able to recover it if you file for bankruptcy before the sale. A Chapter 7 will stop the sale, and if the lender is cooperative, you may be able to work out a reaffirmation agreement, similar to reinstatement, where you agree to make the payments and exclude the debt from discharge. More than likely, though, you will have to file for Chapter 13 and provide for the car payments in your Chapter 13 plan. If the lender still won’t give the vehicle back, the court can order it returned to you.

Carolyn Secor P.A. focuses its practice in the areas of Bankruptcy and Foreclosure Defense in Clearwater, Florida. For more information, go to our web site or call 727-335-7151.