Can a creditor come repossess my car after I file a chapter 7 bankruptcy?

No, but sometimes they do.

When you file a chapter 7 bankruptcy, you file a statement of intention with the court letting your creditors know if you’ll be keeping your secured loans (like car loans and mortgages).  You keep making payments on these loans, eventually sign a reaffirmation agreement, and the loans survive bankruptcy.  

However, sometimes people are behind on car payments and file a bankruptcy with the intention of surrendering the car in bankruptcy and wiping out the debt. Usually, the car lender will give you 1-3 months before they repossess.  They are hoping that you’ll change your mind, reaffirm the debt, and keep making payments.

Sometimes, clients even file the case right before a repossession, hoping to stall the repossession for a few more months so that they can drive the car rent free while they look for something else.  Just this morning, a client contacted me asking if she should worry about a repossession in the middle of the night.  She is about 4 months behind on her truck, we filed a chapter 7, and she will be surrendering it back to the lender when they contact me to make pick-up arrangements.

Here is the conversation:

Client — Will they just randomly pick it up though? We have carseats etc I’m worried about lol. Or do they have to give us some sort of notice?

Me — Technically, they should file a motion for relief from stay to repossess the vehicle, but they usually won’t in a chapter 7. At the meeting of creditors, the trustee directs debtors to surrender their vehicles that they aren’t reaffirming. Relying on this, creditors will come repo even without a motion for relief.

Even worse, some really nasty lenders will come repo the day after we file bk knowing that even if I file a motion for sanctions, I would have to show that not only had we become current, but that we were making ongoing payments.

That being said, usually everyone plays nice and contact me before the repossess a vehicle.

So yes, they should file the motion, but they usually don’t (in a chapter 7).  About 90% of the the time the creditor will contact me, ask for permission to contact you, and then they’ll call to make pick-up arrangements.  Some creditors even ask us to simply drop off the vehicle with the keys at the nearest bank/credit union.  The other 10% of the time, they come in the middle of the night.  It is disconcerting, but we can still wipe out the debt, so there are no repossession fees.