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Repossession is a legal process whereby, most commonly, a creditor who has lent you money to purchase a vehicle seeks to sell your vehicle to Arkansas Repossession to repay the loan after you have become delinquent in loan repayment.  Most commonly, it is a car or truck repossession that people are facing; although, a boat, ATV, RV or any other piece of collateral in which the seller retained a lien can be repossessed. 


The “repossession” of a home is called a foreclosure; we have more  information on that topic here.

When you borrow money to purchase a vehicle, the creditor has you sign a promissory note and then affixes a lien against your automobile.  The lien secures the promissory note in the event that you fail to pay. 


It is this lien that allows the creditor to repossess the vehicle when you fail to pay.  If they did not have the lien, the collateral would be owned by you and they could not repossess the property.  The terms of when a creditor can or will repossess are usually determined by your contract and/or their own business policy.

What Stops Repossession?

One of the major reasons that people file a Chapter 13 reorganization in Arkansas is to stop repossessions.  A Chapter 13 repayment plan allows you to “restructure” your car note over a 36 to 60 month period of time and can help you to stop repossession when you have fallen behind in payments. 


When you purchased the vehicle, the creditor set an amount that was being financed and an interest rate and the “amortized” the payment.  Amortization is a mathematical process of determining how much the payment will have to be to pay a certain debt amount at a certain interest rate over a certain period of time. 


When you file Chapter 13, typically your vehicle is re-amortized over the length of your bankruptcy or is given its regular payment depending on your Chapter 13 plan length and budgetary needs.  Chapter 7 can stop repossession, but only temporarily and you will normally have to cure the defaulted payments in full in a short period of time to be able to keep the vehicle.

Please note, pursuant to Arkansas law, a bankruptcy can stop a repossession and sale of your vehicle.  However, once the creditor has repossessed and sold the vehicle, it can only help you with any deficiency balance owed on the debt.  Typically, cars are sold at auction for very little money compared to what is owed and the deficiency can be substantial. 


Of course, the information contained on this website is merely general information and the facts and circumstances of your individual case may vary and should contact us to receive proper legal advice. For specific personal Arkansas Repossession law information contact our office to arrange a FREE consultation.


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