Can Bankruptcy Save My Car?
How Bankruptcy Can Save My Car
Buying a car over the past year has been a unique experience, with inflation increasing the price of even used car prices. With the increased cost of used automobiles, creditors have an even greater incentive to file repossession orders. Protecting your primary form of transportation during your most difficult times is essential, and the decision to file for bankruptcy should not jeopardize this key asset. It is important to know that bankruptcy code 11 U.S.C.S. § 362(a) expressly states that filing a bankruptcy petition activates the automatic stay.
The basic policy is to promote the orderly administration of the estate while relieving you from the pressures that drove you to bankruptcy in the first place. It accomplishes this goal by allowing the bankruptcy court time to sort through matters without the interference of anxious creditors. If the speediest creditors were permitted to continue to seize your property after the bankruptcy case had commenced, an orderly liquidation and fair and equal distribution of the estate would be frustrated.
The automatic stay enjoins all repossession and foreclosure actions against the debtor or its property. While the stay's scope is extremely broad, eleven exceptions to the stay are codified at 11 U.S.C.S. § 362(b). Given the policies underlying the automatic stay, judicial creation of an exception should be undertaken only in the most egregious circumstances. Judicial resistance to exceptions to the automatic stay stems from the need for uniformity and clarity in bankruptcy law and the desire to minimize litigation.
Bankruptcy stops vehicle repossessions. Section 362(a) provides in subsection (3) in the relevant part that the filing of a petition operates as a stay of "any act … to exercise control over property of the estate …." After the filing of a bankruptcy petition, the debtor has the right to demand the return of a recently repossessed car.
How the Bankruptcy Code Empowers Debtors
The bankruptcy code punishes overly zealous creditors with Section 362(k)(1). Under 362(k)(1), "an individual injured by any willful violation of a stay provided by this section shall recover actual damages, including costs and attorneys' fees, and, in appropriate circumstances, may recover punitive damages." Types of damages include the cost of a car rental pending the return of the car and the cost of reasonable attorney’s fees to pursue the repossessed car.
In essence, filing for bankruptcy empowers you to stand up to creditors, take control, and get back in the driver's seat of your financial life. Filing for bankruptcy is a big decision. It is the last resort, and it's highly recommended that you review your options with an attorney before filing to determine the type of bankruptcy you qualify for and analyze how your ability to retain assets may be impacted going forward.
Save My Car from Repossession in New Jersey
To learn more about how bankruptcy can impact your ability to retain your vehicle, contact us today at 973-281-2388. An experienced New Jersey attorney can help you understand the exemptions the bankruptcy code provides. You may keep more than just your car.