Chapter 13 bankruptcy law provides for the return of a repossessed vehicle provided that vehicle has not yet been sold at auction. Many times the vehicle will be repossessed and the creditor will not move very quickly with the auction. In those circumstances where ownership has not officially changed hands, a Chapter 13 bankruptcy will provide for the return of that vehicle.
The case of Thompson provided a law which basically said that if the vehicle has not been sold yet, the creditor or finance company must return it back to the debtor. The finance company has options at their disposal if the debtor does not continue to make regularly scheduled payments or does not provide for adequate protection through a Chapter 13 to recover the vehicle. The debtor, however, since ownership has not officially changed, has the right to provide or propose a reorganization plan to provide for adequate protection payments and then ongoing monthly payments at a proper interest rate and in a proper value to satisfy that creditor under the United States Bankruptcy Code.
If, on the other hand, more than 30 days has passed and the creditor has sent notice of sale and sale has actually taken place, then it is too late at that point for the debtor to recover the vehicle. So there are certain time limitations here but it really depends on how fast the creditor moves to send out the notice and send it to auction.
If I have a client who has had a vehicle repossessed within 21 days, then I can guarantee that I can get the car back through Chapter 13 because 21 days is not enough time to set the sale. However, it’s been more than 30 days and now we need to look at further options. But you can definitely get a car back prior to it being sold by a creditor in a Chapter 13 bankruptcy.