Individuals filing a Chapter 7 Bankruptcy are frequently behind on their car payments, and if they are not able to catch up on the arrearage, they will generally have to surrender the car. Since most people need a car for survival in the modern world, they usually want to know how long they will be allowed to keep the car. The answer varies depending on the facts.
An automatic stay goes into affect when a bankruptcy is filed, which forbids a creditor from taking any action to collect a debt. This prevents the car lender from legally repossessing the car for non payment. A creditor can bring a motion to lift the stay and request the bankruptcy court to allow them to repossess the car without waiting for the end of the bankruptcy. This involves additional attorney fees though, which often makes the lender feel it is better off by waiting until the automatic stays expires. Furthermore, the motion will still take several weeks to go through the court. If such a motion is brought in your case, you should ask your bankruptcy attorney how long he believes it will take.
If no other arrangement is made the automatic stay on a vehicle loan expires thirty days past the creditors meeting. In the Northern District of Illinois creditor meetings currently occur about a month the bankruptcy is filed. So in most cases a Chapter 7 Debtor may keep the car for at least two months after the bankruptcy filing.
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