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 usually happens 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? If it is the former, then the focus is obviously on getting the car back.
Getting the Car Back
In order to do this, 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 notice.
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. But what if you just don't have the money to bring it current? What if the car is not the only financial problem you have?
Leveraging the Power of Bankruptcy
Bankruptcy can provide a better overall solution to your financial problems, but in order for it to be effective in getting your car back you need to proceed as soon as possible. It also means filing a chapter 13 petition with repayment plan prior to the sale of the vehicle. This would allow you to get the car back without coming up with the money all at once.
Bankruptcy also allows you to prioritize payment of your debt. If you have been juggling payments to creditors, and making the car payment has become more difficult because you have credit card bills to pay as well, then chapter 13 can put the cards at the end of the line, so that you can pay for the car first. You might even be able to lower your car payment!
So What Do I Do?
Losing a car to repossession is often a symptom of a much bigger financial problem. If you are wondering whether you need a solution to a bigger problem, then download my free book, Am I In Too Deep? A Guide to Knowing When You Need to File Bankruptcy in New Jersey to find out if bankruptcy might be the solution.
If you are a South Jersey resident having difficulty paying your bills, and are considering bankruptcy, please feel free to call me at 856-432-4113 or contact me through this site to schedule a consultation in my Woodbury office to see if bankruptcy is right for you.
If bankruptcy is not the direction you want to go, but you still have creditors to contend with, then download by free book, The Biggest Secrets Your Creditors Don't Want You to Know. Become empowered and protect your rights!