Can We Stop Our Car or Other Possessions From Being Repossessed?

Certain types of debts are called "secured". Secured means you have listed some property as collateral for the debt. Examples are car or mobile home loans, where the creditors hold your title until the loan is paid. These are types of secured debts, and should not be confused with debts like MasterCard or VISA debts that are "unsecured".

When you get behind on a payment of a debt that is secured, the creditor can repossess the collateral. Usually, this means that the creditor can just come to your house and take the collateral. The creditor does not have to go to court first. Once an item is repossessed, the creditor will sell the item and apply the proceeds of the sale to payment of your debt.

Generally, the proceeds of the sale are not enough to pay the whole debt. The outstanding balance - which can be very large - is called a deficiency. You can still be legally required to pay this deficiency even though you no longer have the property. Like any other debt, the creditor will pursue collection and this means the harassment starts all over again.

A Chapter 13 Reorganization Plan is usually the best protection available. If you want to keep your property, filing a Chapter 13 prior to repossession will stop the creditor and give you an opportunity to pay the debt over a reasonable period of time without losing your property. If the repossession has already taken place, filing Bankruptcy can get rid of the deficiency debt. If your payments on a secured debt are behind, you must act! Quick actions can save your property. 

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