What Do I Do If I’m Behind on Car Payments?

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Falling behind on car payments can feel overwhelming, but taking immediate action can help protect your vehicle and your financial future. If you’ve missed one or two payments, contact your lender immediately. What you can also do is consider other options to avoid repossession, including:

• Payment Deferment: temporarily postponing payments.
• Loan Modification: restructuring your loan terms.
• Refinancing: potentially lowering your monthly payment.
• Bankruptcy: Chapter 7 and Chapter 13 can help discharge debts.
  

Filing for bankruptcy may be the best option when you fall behind on your car payments because it offers structured debt relief, allowing you to continue on with your life with less stress.

Read our longer answer here about what to do when you’re behind on car payments.

Prefer to Listen? Check Out Our Podcast

This audio covers everything you need to know about car repossession and how bankruptcy can help.

As of early 2021, an estimated 7 million Americans fell behind on their car payments. Unfortunately, if you are one of those people, you may end up facing consequences like having your car repossessed. Not only does vehicle repossession leave you without a ride, but it can also seriously damage your credit and leave you with lingering problems.

Jump to Sections

• How Repossession Works
• What to Do When You’re Behind on Car Payments
• How to Avoid Car Repossession
• An Experienced Debt Relief Attorney Can Help

How Repossession Works

When you take out a loan to purchase a vehicle, the lender generally needs some sort of security measure in case you are unable to pay off the balance. So, under car repossession laws, lenders are able to seize your vehicle if you fail to make your payments. Lenders can then sell the car to cover some of your remaining balance. 

In most areas, lenders do not have to give notice in order to repossess your car. However, they must not “breach the peace”. That means they cannot break into locked buildings, use physical force, or threaten to use physical force when obtaining your vehicle. If a lender breaches the peace during repossession, you may be entitled to damages and should seek the guidance of an experienced attorney.

What to Do When You’re Behind on Car Payments

When temporary solutions aren’t enough, you may need to explore more comprehensive debt relief options. The attorneys at OlsenDaines can help you understand which bankruptcy makes the most sense for your situation. 

Both of these bankruptcy options immediately stop repossession through an ‘automatic stay,’ giving you breathing room to work out a solution:

Chapter 7 bankruptcy may allow you to:

• Discharge unsecured debts, freeing up money for car payments
• Potentially keep your vehicle through exemptions
• Stop repossession proceedings through an automatic stay
• Get a fresh financial start within 3-4 months

Chapter 13 bankruptcy offers different advantages, including:

• Create a 3-5 year repayment plan to catch up on missed payments
• Keep your vehicle while reorganizing debts
• Potentially reduce your car loan balance to the vehicle’s current value (cramdown)
• Lower interest rates on your auto loan
  

How to Avoid Car Repossession

Dealing with car repossession can be a time-consuming and stressful process, which is why it’s best to avoid having your vehicle seized in the first place. Here are some ways to avoid car repossession:

• Set up automatic payments. It can be easy to forget about payments or deadlines. However, if this simple mistake becomes a regular occurrence, it could put your account into default. Many lenders offer automatic payment options to help keep you on track. 
• If possible, make up missed payments. While it is not always possible to make up missed payments, doing so could bring your account out of delinquency and prevent the lender from seizing your vehicle.
• Call or meet with the lender. It could be useful to call or meet with the lender if you are unable to afford your minimum payments. Being transparent about your situation gives you and the lender an opportunity to communicate and find potential solutions. 
• Consult a skilled attorney. If you can’t make your payments and aren’t able to come to an agreement with your lender, then it may be useful to contact an attorney. An experienced lawyer may be able to help you find different solutions, such as filing for bankruptcy. 

An Experienced Debt Relief Attorney Can Help

It can be challenging and stressful to navigate car repossession laws, especially if you aren’t aware of all of the possible solutions. Thankfully, the skilled attorneys at OlsenDaines are prepared to help set you up for success. If you are falling behind on car payments and are worried about having your vehicle repossessed, we may be able to help you find a better resolution. 

Just give us a call to schedule your free consultation!