Repossessed Vehicles: What are my Bankruptcy Options?
Pennsylvania Right of Redemption for Repossessed Vehicles:
Under Pennsylvania law, vehicle owners have a 15-day right of redemption for repossessed vehicles. This means that if an individual can pay the entire car loan balance within 15 days of the repossession, then the lender must return the repossessed vehicle. For most people, the right of redemption is not very practical because if they were able to pay off their entire vehicle loan in the first place then it would not have been repossessed.
Chapter 7 Bankruptcy and Redemption for Repossessed Vehicles:
The right of redemption works differently in a Chapter 7 Bankruptcy. Instead of paying off the entire loan balance, car owners would only need to pay the appraised fair market value in order to redeem the vehicle. This may still be expensive, but some lenders specialize in so called "Redemption Loans," although usually at high interest rates. Without invoking the right of redemption in a Chapter 7 Bankruptcy, the car lender will not return the vehicle, but on the bright side, the vehicle owner will not be
liable for a deficiency between the auction price compared to the remaining balance left on the loan.
Chapter 13 Bankruptcy and reinstating the Loan on Repossessed Vehicles:
In the scenario when the owner of a repossessed vehicle files for Chapter 13, if they act quickly then there is a good chance that he or she can have the repossessed car or truck returned.
The vehicle owner would need to file the Chapter 13 within the 15 day redemption period. That is why it is so important to act quickly when your vehicle is repossessed. In a Chapter 13 Bankruptcy, either the entire vehicle balance, or the fair market value (cram down value), or the arrears amount (depending upon the circumstances), must be paid through the course of a maximum 5 year payment plan.
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