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Benefit from the Experience of Attorneys Bill and Valerie Sherman Former Assistant Attorney General, Assistant County Attorneys and Magistrate Judge

Bankruptcy and Car Repossession

Question: What can I do about my car? I'm 6 months behind and I think they will repossess it soon. I'm scared of a repo but I don't know what do. Can you give me any advice so that I don't have trouble with the car repo?

I live in Alpharetta work in Alpharetta. I live near South Main Street and I work east of Georgia 400. I need to file for bankruptcy. I really need my car. I need the car to go to work and to take my kids to school. I need to do it all because I am divorced and don't get any help from my ex-husband. In Alpharetta, as you know, you need a car to get anywhere.

I bought the car new at a dealership on Highway 9. I didn't spend too much thinking about the financing because we really needed a new car that was dependable and that I could use every day.

But I bought my car about one year ago and I can't afford my payments now. I'm working less hours at work and I lost my part-time job I take a lot of medicine and drugs for a pretty rare illness. The drugs are expensive. Like I said, I'm 6 months behind on the payments.

Answer: Bankruptcy may be helpful for you. If you want to give the car back and purchase another vehicle that is more affordable, then you can put any deficiency that you owe for the vehicle into the bankruptcy petition. In other words, if you return the car to the dealership or if they repossess it, you will owe them money. You will owe them the difference between what you owe on the car note and what the car sells for at auction.

For example, if you owe $20,000.00 on the car note and it is repossessed and sold at a car auction for $13,000.00, then you would be liable for a $7,000.00 deficiency. They would sue you for that amount ($7,000.00), plus attorney's fees and other charges.

You would be able to eliminate the deficiency ($7,000.00) entirely if you qualify for a Chapter 7 bankruptcy.

If you want to keep the car, by filing a Chapter 13 petition you can put any late payments into your bankruptcy plan and pay them off over a period of years (usually 5 years). To keep your car, however, you will have to make your monthly payments going forward, after you file the Chapter 13. So in your case, you can take the 6 months of late payments and put them in the bankruptcy, but you must make all car payments moving forward or else the car can be repossessed.

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