When you file for bankruptcy the automatic stay order is issued, preventing creditors from collection actions including repossession. Although your car loan lender will be prohibited from contacting your and physically taking your vehicle, the issue of the loan debt remains.
In a Chapter 7 bankruptcy, your vehicle is safe from repossession as long as your case is active. However, if you intend to keep the vehicle you will mostly likely be required to repay the loan on the car. In some cases, the bankruptcy court may grant you a principal debt reduction on the amount owed on the vehicle; meaning that you will be responsible for repaying the amount that is left over after the value of the car is subtracted from your current loan amount. Bankruptcy exemption laws do offer protection of a vehicle in a Chapter 7 filing, but that applies to a vehicle that does not carry a loan balance to which you carry the title.
In a Chapter 13 bankruptcy, the vehicle is safe from repossession both during and after your case. However, this is assuming you complete your payment plan as outlined by the court. Your Chapter 13 repayment plan can strip any liens against the car, such as a title loan, and delinquency fees while you make up your missed payments. Car loan debts are often rolled into the Chapter 13 plan, along with your other eligible debts, that payments are spaced out across a period of up to five years. As long as your payments are made on time your vehicle is protected from repossession.
Anytime you are dealing with threat of asset seizure or liquidation over a missed debt payment, it is important to contact a Tampa bankruptcy lawyer to help review your options. In many cases, time is critical for the success of your asset protection.