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A:
If you default on a secured debt like a car loan, the creditor has a right to take the collateral, as long as that can be done without "breaching the peace" (which is why it is often done in the middle of the night). This is usually done after you have missed at least two payments and after threats of repo by the bank.
What you do after you wake up with your car gone from your driveway depends on your overall financial situation. In other words, was the car payment your only problem, or are you dealing with an overall situation of heavy debt that you cannot manage? Even simpler, are you contemplating bankruptcy?
If you are not looking at filing bankruptcy, then you have to make amends with the bank. This usually involves paying the arrearages on the loan (the missed payments) along with the cost of repossession. This is because the bank really just wants your money, not your car. Under New Jersey law, after repo the creditor must send you a Notice of Repossession and Right to Redeem, giving you the opportunity to pay off the loan (or bring it current) and the repo charge within a certain period of time. If they are planning a public sale, then they must state the scheduled date of the sale; if a private sale, then they must give you at least 10 days. The best thing to do is to call them immediately after the repo and make arrangements to pay. The longer you wait, the bigger the problem.
If you are filing bankruptcy, then you need to proceed as soon as possible. If you want the car back you will have to file a chapter 13 petition with repayment plan prior to the sale of the vehicle. In New Jersey you are usually able to get the car back if you pay the repo costs, putting the loan arrearage into your plan. However, it might be possible to put the repo costs in the plan as well.
Losing a car to repossession is often a symptom of a much bigger financial problem. If you are having difficulty paying your bills,and are considering bankruptcy, feel free to call my office at 888-857-8418 or contact me through this site to schedule a consultation to discuss your situation. There may well be a solution that will get you back on the right financial track.
Have more questions about bankruptcy? Get the answers to the most frequently asked questions by downloading my free book, Top Questions People Ask About Filing Bankruptcy in New Jersey. It will give you the answers you need all in one place. Then call me at 888-857-8418 or contact me through this site for an appointment for a free consultation to discuss your case.