Bankruptcy and Car Repossession: What Are Your Options?

Introduction

For many Maryland families, a car isn’t just transportation—it’s essential for work, school, and everyday life. If you’ve fallen behind on car payments, repossession may feel unavoidable. The good news is that bankruptcy can help you protect your vehicle or at least buy you time to explore options.

How Car Repossession Works in Maryland

• If you miss payments, your lender has the right to repossess your vehicle.

• Maryland law does not require advance notice before repossession.

• Once repossessed, the lender can sell your car at auction, and you may still owe a deficiency balance.

How Bankruptcy Stops Repossession

When you file for bankruptcy, the automatic stay goes into effect:

• Immediately halts repossession efforts.

• Stops lenders from calling or threatening to take your car.

• Gives you time to figure out your next move. Chapter 7 and Car Repossession

• You can usually keep your car if you’re current on payments and it fits within Maryland’s bankruptcy exemptions.

• If behind, you may reaffirm the loan (agree to keep paying) or surrender the vehicle.

• Chapter 7 can also eliminate a deficiency balance if you give up the car.

Chapter 13 and Car Repossession

• Chapter 13 lets you catch up on missed payments through a 3–5 year repayment plan.

• In some cases, you can “cram down” your loan, reducing what you owe to the car’s current value.

• This option is powerful for keeping a car you need to get to work or care for your family.

Other Benefits of Bankruptcy for Car Owners

• Stops lawsuits for deficiency balances after repossession.

• Frees up income by eliminating unsecured debts, making car payments more affordable.

• Provides long-term protection while restructuring your finances.

Key Takeaway

If keeping your car is a priority, bankruptcy may be the solution. Chapter 7 can eliminate debt, while Chapter 13 can restructure payments and protect your vehicle.

Conclusion

Losing your car doesn’t have to be your only option. Bankruptcy offers powerful tools to stop repossession and keep you on the road.

Contact Middleton Legal today for a free consultation and find out the best way to protect your car and your financial future.