Yes, it can. One of the things that happens to people in financial distress in New Jersey is that they wake up one morning, and their car is gone from the driveway; it has been repossessed. They have been trying to get current with the payments, but other expenses, like payment on massive credit card debt, has been weighing them down. However, a chapter 13 repayment plan can help with this.

You Need to File Chapter 13 Bankruptcy Quickly!

If you file fairly soon after the repossession (i.e. before it is sold at auction by the bank), then you can argue before a judge that you should get the car back for two reasons:

  • the bank keeping the car would constitute a preferential payment to the creditor, which can be disallowed under the bankruptcy code; and
  • More importantly, the vehicle is needed for you to get back and forth to work to earn money to fund your repayment plan. For this reason, the car is "necessary for an effective reorganization."

The chapter 13 also allows you to prioritize your debt. The car payment gets made every month from now on, while the credit card debt is paid (if at all) from any money left over. You can also use the repayment plan to get current on the past due payments that got the car repossessed in the first place!

Bankruptcy Isn't Always the Practical Option

The reason your car was repossessed was because you failed to make payments. If the bank is willing to return the car if you make the past due payment plus the cost of repossession, then that makes better sense. This is because you will probably pay less doing that than the fees and costs of a bankruptcy.

If the bank is refusing to give you the car back unless you pay the full amount (or you can't pay the back payments all at once), then you are left with bankruptcy. The only practical issue there is having the money to pay the attorney to file it.

Plus There is No Guarantee It Will Work

You should bear in mind, however, that although a chapter 13 can get your car back, there is no guarantee that it will. A motion has to be made before a judge (if the bank does not return it voluntarily), and that judge has to be convinced to enter an order for its return. This will also increase your costs for the bankruptcy.

Every case is different, so if you are over your head in debt, have had your car repossessed, live in Camden, Gloucester, Salem or Cumberland County, and have at least $2,000 for the associated fees and costs, then call my office immediately at 856-432-4113 or contact me through this site to schedule a consultation to discuss your options.

Not sure if bankruptcy is right for you? Take the quiz to the right to find out more!

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Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.

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