Bankruptcy Lawyers
South Carolina


Can Bankruptcy Help Me Get My Car Back After Repossession?

car keys next to stacks of coins on a desk with a man typing on a calculator in the background.

Act fast to protect your independence during collection actions

One of the most immediate questions we hear from South Carolina debtors is, "can I get my car back?" Your car isn't just a car; it may be essential to your ability to do your job and meet other personal and professional responsibilities. How will you get out of debt if you can't drive to work?

The good news is that bankruptcy can help you keep your car and sometimes even get it back after repossession, but you have to act fast. If you're facing repossession or have already had your vehicle repossessed, contact us today to discuss your legal options with a bankruptcy attorney.

How bankruptcy interacts with the repossession process

Under South Carolina law, lenders usually must provide you with a "Notice of Right to Cure" before they can repossess your vehicle. If you have received such a notice, but your car hasn't been repossessed yet, you can interrupt the process by filing for bankruptcy. Keep in mind that this law has some exceptions: it doesn't apply to federal credit unions, and the lender also isn't required to provide a second notice if you default more than once on the same loan.

After your car has been repossessed, the lender is required to provide a "Right to Redeem" notice that explains their intention to sell or auction your vehicle. At this point, you have a limited amount of time (usually 10 days) to pay your delinquency and get your car back.

When you file for bankruptcy, the court will issue an "automatic stay" that stops all collection actions, including repossession. That means if your car hasn't been repossessed yet, the lender can't take it, and if they have already repossessed your vehicle but have not yet sold it, they have to give it back. Of course, the lender can go to court to lift the automatic stay, but that takes time — giving you the opportunity to either resolve the situation with your car or secure alternative transportation.

Once your car has been sold, there's no getting it back. Again, this is why time is of the essence — if you're in repossession, you need to talk to a bankruptcy lawyer right away to protect your legal rights and options. However, even if you can't get your car back, bankruptcy can still help with the remaining debt from your auto loan.

Can I keep my car after filing for bankruptcy?

The short answer is usually yes, but it depends on the type of bankruptcy, the status of your car loan, and the value of your car. For example, in South Carolina, you are allowed to exempt up to $6,325 in vehicle equity from Chapter 7 bankruptcy. You can also apply the $6,325 "wildcard" exemption to your vehicle equity if you don't need it to protect other property. Another option is to "redeem" the vehicle by paying for its fair market value in full — but you have to do this in one payment, which is a tough hurdle for most debtors.

If you file for Chapter 13 bankruptcy, your auto loan will generally be rolled into the Chapter 13 repayment plan with affordable monthly payments. However, if you are underwater on the loan (that is, you owe more than the car is worth), then you may also qualify for a "cramdown," which essentially reduces the balance of the loan to the market value of the car. The rest of the loan is treated like an unsecured debt that will most likely be discharged (wiped out) at the end of the Chapter 13 repayment plan. To qualify for a cramdown, you must have owned the car for at least 910 days (about two and a half years) as of the day you filed for bankruptcy.

Ultimately, only an attorney can tell you whether bankruptcy will allow you to keep your car. To reiterate, the key is to act quickly; the sooner you talk to a lawyer, the more legal options you are likely to have. If your car is about to be repossessed or has already been repossessed, contact us today to speak with an experienced bankruptcy attorney at Benjamin R. Matthews & Associates, LLC.

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2010 Gadsden Street
Columbia, SC 29201

Phone (803) 799-1700
Fax (803) 728-6718

331 E. Main St, Suite 257
Rock Hill, SC 29730

Phone (803) 909-9377
Fax (803) 728-6718