Having your car repossessed can feel devastating. One day it’s there, the next it’s gone and suddenly getting to work or taking your kids to school becomes a challenge.
In Florida, lenders can act quickly when payments fall behind, but that does not always mean you’re out of options. Filing for bankruptcy can sometimes stop repossession in its tracks and, in the right circumstances, even help you get your vehicle back before it’s sold.
How repossession works in Florida
In Florida, auto lenders have the right to repossess a vehicle as soon as you default on your loan, often after just one missed payment. They do not need a court order to do it, as long as they avoid “breaching the peace.”
Once the car is taken, the lender can store it briefly and then sell it at auction. After the sale, you may still owe money if the proceeds don’t cover your loan balance.
How bankruptcy stops repossession
When you file for bankruptcy, an automatic stay goes into effect. This court order temporarily halts most creditor actions, from repossessing your car to making collection calls or pursuing lawsuits. For Florida drivers, this pause offers crucial breathing room to review options and protect essential assets.
Here’s how it works under each chapter:
- Chapter 13 bankruptcy: If your car hasn’t been sold yet, Chapter 13 allows you to include the missed payments in a repayment plan that lasts three to five years. You will continue making regular car payments while gradually catching up on what you owe. In some cases, you may even be able to reduce the interest rate or the total loan balance if the car is worth less than what’s owed (known as a “cramdown”).
- Chapter 7 bankruptcy: Chapter 7 can temporarily stop a repossession through the automatic stay. However, to keep the car long-term, you’ll need to either reaffirm the loan (agreeing to continue payments under the same terms) or redeem the vehicle by paying its current market value in a lump sum.
Timing is crucial. Once the lender sells the car at auction, bankruptcy cannot reverse the sale.
What to do when it’s too late
If your car has already been sold at auction, bankruptcy can’t get it back, but it may still help. After a repossession, many borrowers owe what’s called a deficiency balance, which is the remaining loan amount after the car is sold. Filing for Chapter 7 or Chapter 13 can eliminate this leftover debt and stop further collection efforts.
If you’re facing repossession or struggling with car payments, it may be beneficial to speak with a bankruptcy lawyer about your options.
