Can I get my car back after it’s been repossessed by filing bankruptcy?
If you file a Chapter 13 prior to your car being sold at auction for sale, then you do have the ability undercurrent Chapter 13 bankruptcy law to recover your vehicle. Now, the lender has the right to immediately bring a Motion to Modify the Automatic Stay to avoid the bankruptcy if you are not adequately protecting that creditor, if you don’t have valid auto insurance on that vehicle naming the lien holder as a loss payee or if any other requirements of the Bankruptcy Code are not satisfied to the point where the lender can bring a motion to avoid the bankruptcy and either repossess the vehicle again or sell it if they still have it in their possession.
There is a case called Thompson which basically stood for the proposition that as long as the vehicle had not yet been sold, the vehicle owner had the right to recover that vehicle and propose a Chapter 13 plan that would adequately protect the lien holder and pay all that was required under the Bankruptcy Code over time. Before the Thompson case, lenders used to hold onto those vehicles and try to negotiate, in other words to return the vehicle to the debtor in exchange for a higher monthly payment, a higher interest rate, proof of insurance. Today though, since the Thompson case has come down, the owner of the vehicle has the absolute right, as long as it has not been sold yet at auction, to demand and receive the return of that vehicle.
From that point forward, the debtor must make good on the Chapter 13 proposed plan. The debtor must provide adequate assurance of payment as well as proof of insurance. But the bottom line is, as long as the vehicle has not yet been sold, the vehicle owner can recover it back from the lender even when it was repossessed.