Many people in these hard economic times are having problems paying back their bills. If you fall too far behind on your bills, you may end up facing repossession. Is it possible to end the creditor calls and prevent your car from being taken away from you by the repo man? Yes it is. Bankruptcy might just be the second chance you need. It is easy to feel powerless when creditors are calling non-stop. A lot of people don’t understand that a bankruptcy provides legal protection from creditors keeping the repo man away from your assets. How is that possible? Bankruptcy law is federal law. The moment your case is filed you are given legal protection from creditors. This includes an automatic freeze on repossession efforts. Even if your car has already been picked up you may still be able to get the car back if it has not been sold yet. Bankruptcy provides consumers with options. Contact our office today to see what options are available. In some cases we can even reduce the interest rate that you are paying on your vehicle! How Can Bankruptcy Help Me Keep my Car? Bankruptcy can be very helpful in alleviating financial hardship by protecting property that may be in danger of repossession. Filing Chapter 7 or Chapter 13 bankruptcy will immediately stop repossession of your vehicle under the “automatic stay” provision of the Bankruptcy Code. The automatic stay is an order from the Bankruptcy Court issued to all creditors as soon as a bankruptcy petition has been filed. It prevents creditors from making any further collection attempts against you or your property, which includes repossession of you vehicle. Possession After Default (Georgia Code Section 11-9-503) Unless otherwise agreed, and subject to compliance with other applicable laws, a secured party has, on default, the right to take possession of collateral. In taking possession a secured party may proceed without judicial process only if this can be done without breach of the peace. If not, a legal action may proceed to recover possession. This means that a creditors cannot break into your garage or move other vehicles on your property to recover the vehicle. Right to Redeem Collateral (Georgia Code Section 11-9-506) At any time before secured party has disposed of collateral or entered into contract for disposition under Code Section 11-9-504 or before discharge under Code Section 11-9-505, the debtor or any other secured party may, unless otherwise agreed in writing after default, redeem the collateral by tendering fulfillment of all obligations secured by collateral, expenses reasonably incurred by the secured party in retaking, holding, and preparing collateral for disposition, arranging for sale, and to extent provided in agreement and not prohibited by law, reasonable attorneys’ fees and legal expenses. Compulsory Sale (Georgia Code Section 11-9-505) If debtor has paid 60 percent of the cash price in case of a purchase money security interest in consumer goods or 60 percent of the loan in case of another security interest in consumer goods, and has not signed after default a statement renouncing or modifying his rights under this part a secured party who has taken possession of collateral must dispose of it under Code Section 11-9-504, and if he fails to do so within 90 days after possession, the debtor may recover certain damages. Acceptance of Collateral as Discharge (Georgia Code Section 11-9-505) In cases other than consumer goods 60% cases, secured party in possession may, after default, propose to retain the collateral in satisfaction of the obligation. Written notice of must be sent to debtor if debtor has not signed, after default, a statement renouncing or modifying rights. In the case of consumer goods no other notice need be given, but additional notice to certain holders of subordinate liens. If secured party receives objection in writing from a person entitled to receive notice within 21 days after notice was sent, secured party must sell collateral under Code Section 11-9-504. If no such written objection is received, secured party may retain collateral in satisfaction of the debt. Sale and Application of Proceeds (Georgia Code Section 11-9-504) A secured party after default may sell, lease, or otherwise dispose of collateral in its then condition or following any commercially reasonable preparation or processing. Any sale of goods is subject to Article 2 of the UCC on sales. Proceeds of sale must be applied in order following to reasonable expenses of retaking, holding, preparing, selling, or leasing, and, to extent provided for in agreement and not prohibited by law, reasonable attorneys’ fees and legal expenses incurred by secured party. Proceeds would the be applied to satisfaction of debt secured by security interest under which sale is made Subordinate Liens (Georgia Code Section 11-9- 504) Remaining proceeds would next be applied to satisfaction of debt secured by any subordinate security interest in the collateral if written notification of demand is received before distribution of proceeds is completed. If requested by the secured party, holder of a subordinate security interest must seasonably furnish proof of interest, and unless he does so, secured party need not comply with demand. Public or Private Sale After Notice (Georgia Code Section 11-9-504) Disposition of collateral may be by public or private sale, and may be at any time and place and on any terms, but every aspect including method, manner, time, place, and terms must be commercially reasonable. Unless collateral is perishable, reasonable notice of time and place of any public sale, or reasonable notice of time after which any private sale is to be made, must be sent by secured party to debtor, if debtor has not signed, after default, a statement renouncing or modifying his right to notice. In non-consumer cases additional notice may be required for certain subordinate claims of interest in the collateral. Liability for Failure to Comply (Georgia Code Section 11-9-507) If it is established that the secured party is not proceeding in accordance with these provisions, disposition may be ordered or restrained on appropriate terms and conditions. In addition, damages are provided in this section. The fact that a better price could have been obtained by a sale at a different time or in a different method from that selected by the secured party is not of itself sufficient to establish that the sale was not made in a commercially reasonable manner. If the secured party either sells the collateral in the usual manner in any recognized market therefor or if he sells at the price current in such market at the time of his sale or if he has otherwise sold in conformity with reasonable commercial practices among dealers in the type of property sold he has sold in a commercially reasonable manner. Personal Property In Vehicle (Georgia Code Section 44-14-411.1) Any person who lawfully repossesses a motor vehicle shall be an involuntary, gratuitous, or naked depository of any personal property found in such motor vehicle and has a lien on such property for any reasonable expenses incurred in storing such property or in giving notice to such owner. Within ten days of date of repossession, person repossessing vehicle must notify owner of the intent to dispose of personal property. Notice must be actual notice, but may be by personal service or by service by certified mail. If the personal property is not redeemed within 30 days from the date of the first notice, a second notice must be sent in same manner. If the personal property is not redeemed within 30 days from date of second notice, personal property may be disposed of in manner most expeditious, without further liability and proceeds are disbursed as provided in Code Section 44-14-412. See Georgia Code Section 44-14-411.1 No Deficiency Without Notice (Georgia Code Section 10-1-36) When a motor vehicle has been repossessed after default in accordance with Part 5 of Article 9 of the Uniform Commercial Code, the secured party may not recover a deficiency against buyer unless, within ten days after repossession, he forwards by registered or certified mail to address of buyer shown on contract or later designated by buyer, a notice of the intention of secured party to pursue a deficiency claim against buyer. The notice must also advise buyer of right of redemption, and right to demand a public sale of repossessed vehicle. In event buyer exercises right to demand a public sale, he must advise holder in writing of election by registered or certified mail, addressed to holder at address from which holder’s notice emanated, within ten days after the posting of the original notice. With election by buyer, holder must dispose of vehicle at a public sale as provided by law, in the state and county where original sale took place, or state and county where vehicle was repossessed, or state and county of buyer’s residence, at holder’s election. This provides cumulative additional rights and remedies to the Uniform Commercial Code Provisions which must be fulfilled before deficiency claim will lie against a buyer.