Little Rock Car Repossession Lawyer

How to Stop Car Repossession

If your car has been repossessed or is about to be repossessed, it can be a very stressful financial situation. We know it is no fun having to keep a lookout for a tow truck at every gas station. You may feel like there is no way out and that the creditor will take your automobile away for good! Rest assured: this is not true. All hope isn’t lost if you’re trying to avoid repossession. In fact, there are many steps you can take to keep your vehicle in your possession- we’ll go over them all in today’s blog post!

Automobile dealers and lenders like to try and scare people into scrambling to make up past due payments by threatening repossession. Don’t let yourself be fooled.

There are a few common reasons that banks will try and have a car repossessed. The most common reason is when someone falls behind on their car and had too many late payments. Arkansas has adopted the Uniform Commercial Code, which allows banks to repossess vehicles when the buyer goes into default without going to court. However, the creditor can only repossess the vehicle if it does so without breaching the peace.

Chapter 13 Cramdown. This requires you must have purchased the vehicle and taken out the note at least 910 days (approximately two and a half years) before filing the bankruptcy. So you cannot use a cramdown on a car you recently bought. We know that no person wants to hire a bankruptcy attorney, but sometimes it is best.

In a Chapter 13 bankruptcy, you propose how to make your payment over a three to five-year period. In your plan, you can propose that your lender receive what your vehicle is worth instead of the outstanding balance.

An Example

You borrowed $35,000 to buy a new car in 2015. In 2018, your car is only worth $15,000 and you owe $25,000. This means that only $15,000 is “secured” because if the lender repossessed your car and sold it, it would only receive $15,000 (this is the car’s replacement value). This is where a cramdown can help you.

In your Chapter 13 plan, you can propose a payment plan that only the replacement value of the car is paid through bankruptcy. So in the above example, you can cram down the balance of your loan to $15,000 (the value of your car) and tell your lender this is all you are going to pay.

What Happens When a Car is Repossessed?

The repossession process is fairly simple. Once the creditor takes possession of the automobile, it may sell it at a public or private sale in Arkansas. Most states, on the other hand, allow consumers to retain their automobiles for a limited time after repossession. In Arkansas, consumers have ten days from the date of repossession to redeem their cars.

To redeem, the consumer must pay the full amount left on the car note and any costs and interest that the sales contract specifies. For example, if the consumer defaults on a $20,000 after making $5,000 of the car payment, to redeem the vehicle, you would have to pay the full $15,000 left on the note plus costs and interest.

Do I Still Owe Money After a Repossession

The short answer is, Yes, most likely. When the bank sells the vehicle, it has to do it in a “commercially reasonable manner.” That means the creditor, for example, cannot sell the car worth $20,000 for $1,000. In Arkansas, if the bank sells the vehicle in a commercially reasonable manner and does not recover all of the money owed on your car, then the creditor can go after you for a deficiency judgment.

For example, if you defaulted with $15,000 owed on your car note, a repossession happened, the creditor waited the required ten-day period and sold the vehicle in a commercially reasonable manner for only $12,000, then the creditor will go after you for the remaining $3,000 plus repo fees and interest. Keep in mind this can include all applicable fees, the fees can even include storage fees.

Stop Deficiency Judgment

When you have your vehicle in your possession and owe money on it, that is a secured debt. That means the creditor can take your vehicle if you do not make payments on it. If vehicle repossession occurs, the debt becomes an unsecured debt. A lot of people worry about their credit report and filing bankruptcy, most people’s credit increases after they file. Most people do not end up paying back unsecured debt in bankruptcy, so if you end up with a deficiency judgment you may be able to not pay that back and increase your credit by filing bankruptcy. Click to read more about Bankruptcy and Unsecured Debt.

What Happens if the Repo Man Can’t Find My Car?

Once the repo process has been started, the repo man can take your vehicle from your driveway, your workplace parking lot, or even while you’re out shopping. During this time some people try to keep their auto out of the repo man’s reach. This may be keeping it in a locked garage, or parking it at a friend’s house, or taking off the license plate.

Repo Companies are familiar with these tactics. They won’t give up. If you keep it hidden long enough, then the creditor will typically take you to Court a get a judge to order you to turn over your vehicle. Remember, they can come after you the repossession costs, so the more expensive it is, then the more you may have to pay.

How to Stop Your Car From Being Repossessed

There are a number of ways: 1) Refinance your auto loan, 2) Reinstate your car loan, 3) Sell your car yourself and pay off the original loan, 4) Surrender your car, or 5) file for bankruptcy.

Refinancing your loans may not be an easy process. If you are missing payments and facing vehicle repossession, then the past due payments may be on your credit report. If you can refinance, the new loan would pay off your outstanding debt and maybe your new loan contract would offer a better interest rate! Reinstating your loan is making up all late payments. We understand this may be hard to do when you haven’t been able to make a car payment.

Selling your car will avoid car repossession and because you have control of the price it sells for you may be able to sell the car, pay the remaining balance, and not have a deficiency balance. You can always voluntarily surrender your car. This will stop repo men from coming to see you and lower the repo costs.

Stop Repossession

It may be in your best interest to file for bankruptcy. When you file for bankruptcy, the court will issue an order called the “automatic stay.” This is a fancy way of telling your creditors that they have to stop trying to collect the money you owe them while the court hears your bankruptcy petition. If creditors continue harassing you after the automatic stay has been issued, they can be sanctioned and fined with hefty penalties. While some creditors don’t know about the automatic stay, we’d be more than happy to write a strongly worded letter to educate them about how they’re no longer allowed to pester you.

Can I Get My Car Back if it Has Been Repossessed?

If repossession of your car has already happened, you must act fast. When a creditor takes your vehicle, if they want to collect a deficiency balance after selling it, they will send you a letter stating how many days you have to redeem the car by paying off what is owed on it. If they are not going to try and collect a deficiency balance, then they can sell it without any notice to you. If you hire our law firm and start the attorney-client relationship, then we can help get your repossessed car back!

Get Your Car Back

However, by filing for Chapter 13 bankruptcy, you’ll be able to avoid all of this. Your automobile may not be sold at auction after the case has been filed. The lender is obligated by law to give back your vehicle as soon as possible. It is much easier to stop the repo man than get your car back from him, but either way, we can help you keep your car.


Don’t let creditors boss you around. If you’re getting calls from creditors or threats of repossession, contact a bankruptcy attorney in North Little Rock today. We can help. If you need help you can text or call.

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wh Law, is a debt relief agency. We help people file for bankruptcy protection under the U.S. Bankruptcy Code.

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