I haven’t been able to pay my bills. Could I lose my car?

By Alfred Villoch, III, with Savage, Combs & Villoch, PLLC

If you miss car payments, the company that loaned you the money to purchase the car can likely take back your car in what is called “repossession.” The right to take back your car for nonpayment usually comes from the terms of the signed loan paperwork when you buy your car. Usually, a few missed payments and the loan company will start calling you and sending you warning letters. Warning calls and letters will ultimately lead to repossession. Once the loan company repossesses, it can then sell your car at an auction and apply that money to pay down the amount that you still owe. This can also happen with car title loans (e.g., where you receive a loan and agree to give the loan company your car title as security and part of your promise to pay back the loan. This is called a security interest). In situations where the car is part of your promise to pay back a loan, the answer is “yes”: you could lose your car if you don’t make your car payments. Bankruptcy can immediately stop this process. If you haven’t paid other bills, like a credit card or a payday loan, you could still lose your car, but the situation is a bit different and the company must take a few extra steps. For example, the company must first sue you to get a judgment in court. With a judgment in hand, the company can then apply to the court to have the sheriff take your car and sell it. This process is similar to repossession and is called a writ of attachment. The company would then use the money from the sale of your car as payment down on the amount that you owe. Bankruptcy can immediately stop this process too. It is also important to note that Florida offers a $1,000 car exemption. Unfortunately, this exemption is still very low and hasn’t changed in years. It means, if your car is worth less than $1,000, which very few cars are, you get to keep the car and its exempt from attachment. Another scenario where the exemption applies is if your car has less than $1,000 in equity. This often happens when you owe more than the car is worth. If a sheriff takes your car under a writ of attachment, you can apply to the court for recognition of your exemption and request the return of your vehicle if it falls squarely within the exemption. Florida also has a generic, personal property exemption of $4,000, and in certain instances, you can combine the $1,000 car exemption with the $4,000 personal property exemption to claim a total exemption of $5,000 for your car. As you can see, it can be very stressful when you’re unable to pay your bills on time. Depending on your situation, bankruptcy can help you stop the taking of your car and provide you with the relief necessary for a fresh start. For immediate help and more details, call Savage, Combs & Villoch, PLLC, at 813-200-0013.