Did you originally plan on keeping your car but changed your mind? That is totally ok! Here is what you need to do to make sure you’re protected, depending on where you are in the process.
Let the bank know
The first thing you should do is call your lender and let them know that you’ve changed your mind and want to surrender the car instead of keeping it. They may have a specific process to set up a time and place for them to come pick up the car.
I just filed and my 341 Meeting of Creditors has not happened yet
This early in the process you should update (amend) your official Statement of Intentions that was filed along with your bankruptcy forms following these steps and submit it to the court while you’re there for your creditors’ meeting. Of course, you can also file it before then by mailing the updated form to the courthouse or dropping it off at the clerk’s office.
My 341 Meeting of Creditors has already happened
If it’s been more than 30 days since your case was filed and / or your creditors’ meeting has already happened, don’t worry about amending the forms to surrender the car as you’d need to get special permission from the court first. That’s no problem, though, as the main purpose of filing an amendment is to notify the creditor. You can (and should) always notify the creditor directly even when you’re not filing an amendment.
Do I have to keep making payments?
No. If you’re sure that you’re ready to give the car back, you can stop making your car payments. The bank is not allowed to contact you for missed payments, but they may file a motion for relief from the automatic stay, which is a request for permission to repossess the car. Alternatively, the bank can simply wait until the automatic stay expires, which happens 45 days after the date for your creditors’ meeting if no reaffirmation agreement was signed.
Keep the car insured while you have it, even if you stopped making payments on the loan, to make sure you’re protected if something happens.
When will they come get my car?
To avoid having the car repossessed while you’re out and about, it’s a good idea to call the bank and let them know when you’re ready to have the car picked up. This will not only help you avoid getting stranded if the car is picked up unexpectedly, it also often helps the bank avoid some costs. It’s common for the bank to wait until your discharge has been entered before picking up the car.
Note: Once the automatic stay has expired, the bank doesn’t have to contact you and can repossess the car without contacting you first.
Is there anything I can do if I already signed a reaffirmation agreement?
Yes, but you’ll have to act quickly, especially if the judge approved the agreement (or your bankruptcy lawyer signed off on it). You can change your mind and “rescind” or cancel the reaffirmation agreement any time before your discharge is entered or within 60 days from the date on which the reaffirmation agreement was filed with the court. If you’re not sure about the timing of your reaffirmation agreement, call the clerk at the bankruptcy court to find out.
To make sure that the agreement is officially cancelled, you should file a notice with the court. It can be as simple as “I am giving notice that I’m cancelling my reaffirmation agreement with Chase Bank, N.A. for my 2012 Honda” as long as it contains all the important case information at the top.
Call the court to find out if they have a template you can use to make sure you get it right. You’ll also want to make sure that you send a copy of this notice to the bank. To let the court know that you’ve done this, it’s a good idea to include a certificate of service at the end of your notice.
Conclusion
It is totally ok to change your mind about keeping your car even if you originally planned on keeping it. You just have to make sure to let the bank know that you’ve changed your mind and schedule a time for them to come pick it up. If you’ve signed a reaffirmation agreement, it’s important to send a written cancellation notice to the court and the creditor, so you don’t continue to be responsible for payment of the car loan.
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