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Will Filing for Bankruptcy Get Back My Repossessed Car?

Deborah Brooks & Associates, P.C. June 10, 2024

Lawyer, judge's gavel and miniature car Financial problems can happen to anyone. You might have found yourself unable to keep up with your car payments, which might have resulted in the repossession of your vehicle. It's a tough situation, but there's hope.  

At Deborah Brooks & Associates, one question I often hear from my clients is, "Will filing for bankruptcy get back my repossessed car?" The short answer is yes. Filing for bankruptcy can be a powerful tool for recovering your repossessed car and regaining control of your finances. 

Let's explore this question in further detail: 

Understanding Repossession and Bankruptcy 

When you finance a car, the lender holds the title until you fully pay off the loan. If you fall behind on payments, the lender has the right to repossess the car without warning. This means they can take the vehicle and sell it to recover their losses. 

Bankruptcy, on the other hand, is a legal process designed to help individuals or businesses eliminate or repay their debts under the court's protection. There are different types of bankruptcy, but the most common for individuals are Chapter 7 and Chapter 13. 

Chapter 7 Bankruptcy 

Known as "liquidation bankruptcy," Chapter 7 involves selling non-exempt assets to pay off creditors. While this type of bankruptcy can quickly discharge many unsecured debts like credit card balances and medical bills, it might not automatically get your repossessed car back. However, if you file for Chapter 7 before the car is sold at auction, you might have an opportunity to pay a lump sum to reclaim it. 

Chapter 13 Bankruptcy 

Referred to as a "wage earner's plan," Chapter 13 allows you to keep your property, including a repossessed vehicle, by reorganizing your debts into a feasible repayment plan over three to five years. Under Chapter 13, you can propose a plan to make up missed car payments and reinstate the original loan agreement, potentially recovering your repossessed car. 

Chapter 7 Bankruptcy and Car Repossession 

Filing for Chapter 7 bankruptcy can sometimes help you get your car back if it was recently repossessed. 

The Automatic Stay 

When you file for bankruptcy, an automatic stay goes into effect immediately. This stay halts all collection activities, including repossession. If your car was repossessed before you filed for bankruptcy, the lender must return it if you file quickly enough and meet specific requirements. 

Reaffirmation Agreement 

To keep your car in a Chapter 7 bankruptcy, you may need to sign a reaffirmation agreement. This agreement states that you will continue to make payments on the car loan despite the bankruptcy filing. This option must be carefully considered, as it means you'll remain liable for the debt. 


Another option under Chapter 7 is redemption. This allows you to buy back the car by paying its current market value in a lump sum, regardless of the remaining loan balance. This can be a good deal if your car is worth significantly less than what you owe. 

Chapter 13 Bankruptcy and Car Repossession 

Chapter 13 bankruptcy, also known as reorganization bankruptcy, allows you to create a repayment plan to pay off your debts over three to five years. This type of bankruptcy can also help you recover your repossessed car. 

The Automatic Stay and Repayment Plan 

Like Chapter 7, filing for Chapter 13 triggers an automatic stay, stopping repossession actions. In Chapter 13, you can include your car loan arrears in your repayment plan. By catching up on missed payments over time, you may be able to get your car back and keep it. 

Lowering the Loan Balance 

Chapter 13 also offers a unique benefit called a "cramdown." This reduces the balance of your car loan to the vehicle's current market value. To qualify, you must have purchased the car at least 910 days (about 2.5 years) before filing for bankruptcy. 

Repossession and Bankruptcy Laws in Oklahoma 

In Oklahoma, lenders can repossess vehicles without prior notice if payments are missed. However, they cannot breach the peace during the repossession process. This means they cannot use physical force, threaten you, or break into your property to take the car. 

Oklahoma Exemptions 

Oklahoma has specific exemption laws that protect certain assets from being liquidated in a Chapter 7 bankruptcy. For instance, you can exempt up to $7,500 in equity on a motor vehicle. This exemption can help you keep your car in a bankruptcy case. 

Repossession Process and Consumer Rights 

Knowing your rights during the repossession process is essential. If your vehicle is repossessed, the lender must provide you with a notice of sale after repossession. This notice should outline the details of the sale, including the time and place, and give you an opportunity to reclaim your vehicle before it is sold. 

Once the vehicle is sold, if the sale proceeds do not cover the remaining loan balance, the lender may seek a deficiency judgment against you for the remaining amount. However, under bankruptcy protection, such deficiency judgments can often be reduced or eliminated. 

Bankruptcy and Deficiency Judgments 

Filing for bankruptcy in Oklahoma can impact deficiency judgments resulting from repossession. In a Chapter 7 bankruptcy, deficiency balances on secured debts, like a car loan, can be discharged, freeing you from the obligation to pay the remaining balance.  

In a Chapter 13 bankruptcy, you can include the deficiency amount in your repayment plan, potentially lowering the total amount you owe and giving you more manageable terms. 

What To Do if Your Car Is Repossessed 

If your car has been repossessed, there are specific steps you can take: 

  • Contact the lender: Contact your lender immediately and see if they are willing to work out a payment plan or settlement to get your car back. 

  • File for bankruptcy immediately: If you're considering bankruptcy, time is of the essence. The sooner you file, the better your chances of recovering your car. 

  • Consult with a bankruptcy attorney: An experienced bankruptcy attorney can guide you through the process and help you understand your options. 

  • Review your loan agreement: Carefully examine your original loan agreement to understand your rights and obligations. This could offer solutions or shed light on any available legal recourses. 

  • Explore other financial options: See if you can access emergency funds, borrow from family or friends, or obtain a short-term loan to pay off the arrears and reclaim your car. 

  • Attend the repossession sale: If your lender intends to sell your car, you could attend the auction, bid on it, and repurchase it, often at a reduced price. 

  • File a complaint: If you believe the repossession was conducted unlawfully, consider filing a complaint with your state's attorney general or the Consumer Financial Protection Bureau. 

Consult a Knowledgeable Bankruptcy Lawyer in Oklahoma 

If you're facing repossession and considering bankruptcy anywhere in western Oklahoma, reach out to Deborah Brooks & Associates. We're here to help you through this challenging time with compassion and expertise. Call today to schedule a consultation and take the first step toward financial freedom.