It is very common for clients to seek assistance when their automobile has been repossessed. Fortunately, in many cases, filing a Chapter 13 Bankruptcy will allow the individual to get the vehicle back and provide for the payments in a Chapter 13 Plan which would include any other debts they may have. The procedure for getting the vehicle back falls under Section 542 of the Bankruptcy Code which deals with “Turnover of the Property of the Estate”. Whenever someone files a Bankruptcy case an estate is create by Law which basically includes anything and everything that a person might own. This includes tangible items such as a motor vehicle. As long as the vehicle still remains titled to the person filing bankruptcy, it falls under property of the estate even though the creditor may have physical possession of the vehicle because of the repossession. With Tennessee being a title state, ownership is determined by the title and up until the vehicle is sold in a repossession sale would ownership change. So, even if your vehicle has been picked up, you still have a chance of getting it back if you can file a Chapter 13 case before the creditor sells the vehicle. You will generally have to be able to show insurance that protects the creditor if the car became damaged and you must be able to put forth a feasible Chapter 13 Plan that will provide for the vehicle creditor and other creditors that you may have.
Sometimes, the creditors will return the vehicle upon being provided proof of the Chapter 13 filing and a copy of the insurance. This means you could get the vehicle back very quickly if the creditor decides to cooperate. If the creditor refuses to return the vehicle, a Motion for Turnover of Collateral would be filed with the Bankruptcy Court and a hearing would be held before the Bankruptcy Judge. In these cases, there is a very good chance that you would get the vehicle back. Generally, it would take a couple of weeks to get a hearing before the Judge; however, the creditor would not be able to do anything with the vehicle during the waiting period.
As you note, the above all references filing a Chapter 13 case. In Chapter 7 Bankruptcy there would not be a way to get the vehicle back following a repossession in most cases and if the vehicle was returned it would be to the Chapter 7 Trustee who would be looking at possibly selliing the vehicle to get money to pay all of your creditors. This usually happens in cases where the title work was not done correctly prior to you filing Bankruptcy. So the creditor might have to give the vehicle back in Chapter 7 but it would not be to the person filing bankruptcy. You would be able to get rid of any debt you might owe on the repossessed vehicle in Chapter 7. So if you were not interested in getting the vehicle back and you qualify, Chapter 7 might be the better choice.
Bankruptcy can help you get your car back but you must be quick or the vehicle will be sold before you can get your Chapter 13 filed. If you car is repossessed, please call us as soon as possible and we will be happy to review with you your options within Bankruptcy.

David Phillips