Understanding Your Rights When It Comes To Car Repossession

Car repossession laws in Arizona protect your rights by requiring creditors to follow specific procedures. The most dependable way to stop repossession or get your vehicle back after being repossessed is to file bankruptcy. Arizona law lets you file bankruptcy to eliminate judgments and stop repossession if you can't afford to pay all your creditors according to your contracts. At Judge Law Firm, we will help you understand and protect your rights.

The creditor can repossess your car peacefully from a public location without notifying you of their intent to do so. This can occur even if you are only one day late on a payment, unless your contract includes a grace period for making payments.

According to Arizona's car repossession laws, if your car or other vehicle is repossessed by a creditor, but not yet auctioned to pay your debt, you can reclaim your vehicle by paying the entire balance of your debt — not just the past-due payments — and any collection expenses the creditor incurred. You may be able to get a second loan to cover the past-due balance if you can show that you can afford payments for both the new loan and the existing vehicle loan, though in most cases this is not recommended.

Unless you file bankruptcy, Arizona car repossession laws state that your creditor can auction your repossessed vehicle and apply the proceeds toward your debt. However, the creditor must notify you in writing that they intend to auction your vehicle. This gives you time to get payment to them and stop the auction or file bankruptcy.

If the creditor auctions your vehicle for less than you still owe on the loan, they can also sue you for the deficiency (the difference between what you owe and what they sell the vehicle for). If they get a judgment for the deficiency, they can seize other property of yours or garnish your bank accounts or wages to pay off the judgment.

Bankruptcy And Car Repossession Laws

If you intend to file bankruptcy in Arizona to get your vehicle back, your best bet is filing for Chapter 13 bankruptcy. If you file Chapter 13 bankruptcy, in some cases, it may be possible to get your loan balance reduced to the vehicle's fair market value in a Chapter 13 bankruptcy. Since Chapter 13 is a way of restructuring payments to pay off debts, the court can order the creditor to return your repossessed vehicle, according to car repossession laws regarding bankruptcy.

If you have other debts and judgments against you and you want to discharge those debts, then a better option may be a Chapter 7 bankruptcy. Eliminate judgments and other unsecured debts quickly in a Chapter 7 bankruptcy. However, Chapter 7 bankruptcy usually will not get your repossessed car returned to you. While Chapter 7 bankruptcy will put a stay on repossession activities when you file bankruptcy, Arizona law allows creditors to request the stay be lifted in order to sell the car and pay your debt. Secured loans, including vehicle loans, are not typically discharged in Chapter 7 bankruptcy unless you surrender the property.

Car repossession laws are tricky. If your car or other vehicle is in danger of being repossessed or has been repossessed already, you should talk to a lawyer immediately to find out what your options and rights are and find out what your best course of action is. Jeffrey Judge of the Judge Law Firm can talk to you in a consultation. Simply click the link below and fill out the form.

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