As soon as a bankruptcy is filed, creditors cannot repossess your cars or collateralized property. The automatic stay prevents creditors or an agent (like a towing company) from taking the property even if the filing is made minutes before they arrive.
If the creditor does not learn of the bankruptcy until after they have already repossessed your property, they must return the property to you. For example, if the case is filed on Thursday morning and the bank is slow to get notice to the right person, they may still conduct the repossession later that day or on Friday. Because the case was filed before the repossession was conducted, they must return the property to you.
What if I file after the repossession of a vehicle has already happened?
If you are filing under Chapter 7, case law has shown there is little that can be done to get the vehicle returned to you. There is an argument that has worked in other jurisdictions that your ownership and title interests in the vehicle remain in place until the bank transfers the title at an auction or subsequent sale. Although this argument is supported by the Uniform Commercial Code, it has not succeeded in this jurisdiction.
If you are filing under Chapter 13, we can demand return of the vehicle. Creditors are required under the law in Chapter 13 to return secured repossessed property even if your case is filed after the repossession. Generally, the bankruptcy filing will need to be made within 10 days of the repossession.
If you fear your property is about to repossessed or it has recently been taken, set an appointment with our attorneys to protect your property.