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Michigan personal bankruptcy: methods to stop repossession

When Michigan residents are struggling with finances, they often have a lot of debt problems on their mind. In addition to considering debt relief options, debtors in Michigan are also concerned with the possibility of asset forfeiture such as vehicle repossession. For those financing or leasing a vehicle, the repossession of an automobile could occur if the consumer missed a payment or defaulted on their loan. In these matters, it is not only crucial that the debtor understands their consumer rights but also how to stop repossession of their vehicle and even get their vehicle back.

As soon as a consumer defaults on a loan or lease for a vehicle, their contract will state what will occur in this event. In most situations, the failure to make timely payments will result in repossession. There are various options for debtors to avoid or stop this outcome.

First, the debtor could work with the creditor to modify or change the terms of the original contract. A new payment plan could better accommodate the financial issues of the consumer and could prevent the repossession of their vehicle. If a creditor does make adjustments, these should be memorialized in writing.

If a creditor will not negotiate and modify a payment plan, a debtor has other options. They could reinstate their loan, which means paying the amount they are behind on the loan as well as any expenses incurred by the creditor in the process. Another option is to do a buy back, which is paying back the past due payments and well as the entire remaining debt in addition to the costs associated with the repossession process.

Lastly, the debtor could stop the repossession of their vehicle by filing for bankruptcy. Chapter 13 allows the debtor to negotiate a repayment plan, while with a Chapter 7 filing, the debtor must have filed before the repossessed car is sold in order to get it back.

Residents in Michigan often heavily rely on automobiles to get around. This means if they have their automobile repossessed, they have no means to get to work, shop for groceries and other necessary items or take their children to and from school. Because vehicles are an important consumer good, it is often important that debtors keep them and avoid or stop repossession.

Source: FTC.gov, "Vehicle Repossession," accessed on Jan. 12, 2015

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