Can Bankruptcy Stop Repossession of Self-Repossessing Cars?

April 5, 2023

Repossession is a scary process that can be hard to avoid. But what if your car could repossess itself? That’s the idea behind Ford’s patent for self-repossessing cars. This blog post will explore the pros and cons of self-repossessing vehicles.  It will also explore whether bankruptcy can stop the repossession of a self-repossessing car.

What Is a Self-Repossessing Car?

Self-Repossessing Car and BankruptcyA self-repossessing car is equipped with GPS tracking technology that allows it to be remotely tracked and monitored. Creditors use this technology to track borrowers who have fallen behind on their payments. If payments are not made on time, the creditor can use the GPS tracking device to locate the vehicle and repossess it without sending out a tow truck or repo man.  Eventually, a self-driving car may even return itself to the lender or auto dealer.

The Pros of Self-Repossessing Cars

The biggest advantage of self-repossessing cars is that they allow creditors to quickly and easily recover their vehicles without the hassle and expense of sending out repo men or tow trucks. Additionally, some lenders may offer lower interest rates or more flexible payment terms for borrowers who agree to use self-repossessing cars.  This is because the lenders know they will not have trouble recovering their collateral if payments become delinquent.

The Cons of Self-Repossessing Cars

One major downside of self-repossessing cars is that borrowers may feel their privacy is being invaded.  Remember,the lender would be using GPS tracking technology to monitor them. Additionally, since lenders can track the movements of borrowers even after a vehicle has been repossessed, some borrowers may feel like they are being watched or harassed even after the fact. Finally, self-repossessing cars are expensive.  Currently, most lenders still charge significantly higher interest rates for loans secured with this type of technology than those secured by traditional means.

Can Bankruptcy Stop Repossession of Self-Repossessing Cars?

The general answer to his question is, yes, bankruptcy WILL stop the repossession of self-repossessing cars.  In Chapter 7, no action for any kind of collection can take place after the bankruptcy case is filed.   Therefore, it would likely be illegal for the car to self-repossess itself or render itself inoperable after the case is filed.  You may, however, have a gray area where self-repossessing cars have already turned off but are still at your home.   If you still have possession of the car, you should arguably be able to force the lender to reactivate the car through the powers of the bankruptcy court.

Chapter 13 bankruptcy is much more clear: they should always release or return the car.   As long as a car has not been sold privately or at auction to dispose of it, the lender is legally required to return the car.   This would include situations where the self-repossessing car deactivated itself or returned itself to the lender.  Do keep in mind, however, you may only have 1-2 weeks or less to get a car back with Chapter 13 before it is properly sold.  After any sale, you are out of luck.  Even Chapter 13 can then not get your car back for you.

To Repossess or Self-Repossess: That is the Question

Self-repossessing cars offer both advantages and disadvantages for lenders and borrowers alike. For lenders, these vehicles provide an effective way to quickly recover cars in case of delinquency while avoiding the hassle and expense associated with traditional repossession methods. However, these vehicles often have higher interest rates than other loan types. They can make some borrowers feel like their privacy has been violated due to constant monitoring via GPS tracking devices. Ultimately, whether or not a borrower chooses a self-repossessing car should depend on their individual needs and situation.

If you live in Indiana and need to stop vehicle repossession, we can help. Contact us now and schedule a free consultation.

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