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Steps to take if you are facing repossession of your car

It can only take one life-altering event -- perhaps a sudden and expensive illness, a job loss or the death of the family breadwinner -- to cause a person's finances to take a hit, making it difficult to meet their financial obligations. One of these obligations for many in New York is making monthly payments for an automobile. Unfortunately, if you fail to make these payments, your creditor may attempt to repossess your car.

When a vehicle is repossessed, the creditor takes back the automobile. Creditors do not need a court order to repossess a vehicle if the debtor defaults on their loan. Since driving is a daily necessity for many, it is important to understand what to do if your vehicle is repossessed.

One step debtors can take is to try to enter into negotiations with their creditor. If a debtor anticipates that they will not be able to make their monthly payment on their automobile, they can proactively contact their creditor to negotiate a revision of their payment plan. If negotiations are successful, it is important to get them in writing.

Another option is voluntary repossession. In a voluntary repossession, the debtor elects to turn in their vehicle. This could bring down the number of expenses the debtor may be hit with.

In addition, though the laws vary from state to state, if the debtor was not notified in advance that their vehicle was going to be repossessed, the debtor may be able to get their vehicle back in a process known as the reinstatement of the loan. To do so, a certain amount of time must have gone by, and the debtor must pay the entire amount past due along with any fees related to the repossession.

Finally, debtors can opt to file for bankruptcy. If a debtor chooses to file for Chapter 7 bankruptcy, they must do so before the sale of their vehicle in order to get it back. Chapter 13 bankruptcy allows debtors to create a payment plan that will allow them to retain their vehicle.

As this shows, debtors do have options when it comes to repossession. Those with further questions about their rights if their vehicle has been repossessed may want to seek the advice of a professional.

Source: FindLaw, "How to Get a Repossessed Car Back," accessed Feb. 1, 2015

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