Avoiding Auto Repossession Using Bankruptcy

Avoid Auto Repossession

If you live in Chicago, a car is necessary to carry out the business of day-to-day life. Even if you use public transport to get to work, other life tasks such as going to the supermarket, going to school or taking your children to various activities require a car. If you fall behind in your car payments, you run the very real risk of having one of your most important necessities taken from you.

For many people fighting to make ends meet, the threat of having their car repossessed is a monthly reality. Although they may have survived the worst part of the recession, they have fallen into a pattern of juggling debts just to get by.

Fortunately there are options. Deciding what to do means understanding how repossession works, when it can happen and learning about the solutions a bankruptcy can offer.

How Repossession Works

Car repossession is the lender’s right to take back the vehicle without having to file a lawsuit against you if you fail to make payments due under your financing or lease agreement. The lender retains this right until you have paid off the loan on the vehicle or the lease ends.

In Illinois, once you fall behind on payments the lender can come onto your property – without giving you prior notice – and take the vehicle. However, there are limits. The lender cannot commit a “breach of the peace” by using physical force or threats while in the process of taking the vehicle.

Once the creditor has seized the vehicle, the creditor has the right to decide how he or she wants to dispose of the vehicle. However, the creditor must return any personal property in the vehicle to you within five business days. In most cases, the creditor will sell the vehicle to pay off the remaining balance of your debt.

Once the car has been repossessed, Illinois law gives you have the right to redeem-to buy back the vehicle by paying the amount you owe plus the costs of repossession.

Preventing Repossession

It is much easier to prevent a vehicle from being possessed than to get it back once it has been taken. If you know that you are going to miss a payment, contact the lender as soon as possible. You may be able to negotiate a forgiveness for the delay in payment. Be sure to get any agreements in writing.

If the lender will not work with you, filing bankruptcy can prevent repossession of your vehicle. Chapter 13 bankruptcy has a number of advantages. In addition to allowing you to get caught up on payment arrears, you may be able to use Chapter 13 bankruptcy to reduce your car payments.

The laws surrounding repossession in bankruptcy are complicated and the timing can be critical. If you are facing car repossession and need help with your payments, contact an experienced Chicago bankruptcy attorney right away to discuss your options.

Convenient Locations

In order to provide convenience for clients throughout Chicago and Northern Illinois, we have offices in the following locations: 

Chicago • Schaumburg  • Oakbrook • St. Charles • Naperville • And More


We have office locations throughout the Chicago Area:

Chicago (Downtown)


Oak Brook


All calls are routed through our Downtown office for your convenience.

Phone: 312-967-3159

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