The tow truck shows up at 3 a.m. By morning, your car is gone, and you’re scrambling to figure out how to get to work. For thousands of Kansas City residents each year, this becomes reality. But here’s what the repo company won’t tell you when they take your vehicle: bankruptcy might give you the power to get your car back and keep it.
If you’re behind on car payments or your vehicle has already been repossessed, you need to know your rights under Missouri law. More importantly, you need to know how bankruptcy can stop repossession and sometimes even reverse it.
How Car Repossession Works in Missouri
Missouri allows what attorneys call “self-help” repossession. This means your lender doesn’t need a judge’s permission to take your car. They can hire a repo company and send them after your vehicle as soon as you’re in default. However, Missouri law requires them to follow specific procedures before they can take action.
The 30-Day Notice Period Before Repossession
Under Missouri Revised Statutes Section 408.555, once your payment is at least 10 days late, your lender must send you a “Notice of Default and Right to Cure.” You then have 20 days from the date you receive this notice to catch up on your payments.
This gives you roughly 30 days total from when you first missed a payment before repossession can legally happen. During those 20 days, you can cure the default by paying all past-due amounts, including any late fees. Once you do this, you’re back in good standing.
There’s an important exception. If you’ve already defaulted on this same loan twice before and cured those defaults, your lender doesn’t have to give you another notice. They can proceed directly to repossession after you miss that third payment.
What Repo Agents Can and Cannot Do
Missouri follows the Uniform Commercial Code, specifically Section 400.9-609, which allows repossession only if it doesn’t “breach the peace.” This legal phrase has real consequences for how repo companies operate.
Repo agents can take your vehicle from:
- Public streets and parking lots
- Your driveway
- Unsecured carports or parking areas
They cannot:
- Break into locked garages
- Use physical force or threats
- Enter gated communities without permission
- Continue taking the car if you verbally object in person
- Damage your property during the repossession
If a repo agent violates these rules, the repossession might be unlawful. You could have grounds to get your vehicle back and potentially recover damages. Many people don’t realize they can call the police if a repo agent breaks the peace. The agent could face criminal charges for disturbing the peace or trespassing.
What Happens After Your Car Gets Repossessed
The story doesn’t end when the tow truck drives away. Missouri law under Section 400.9-614 requires your lender to send you specific notices about what comes next.
Within a few days of repossession, you should receive a “Notice of Our Plan to Sell Property.” This notice must tell you where and when the lender plans to sell your vehicle. More importantly, it gives you one last chance to get your car back.
Your Personal Property Must Be Returned
The lender took your car, but they can’t keep your belongings. Missouri law requires them to return your personal property. This includes everything from your child’s car seat to your work tools to emergency cash you kept in the console.
However, items you permanently installed in the vehicle, like an expensive sound system you bolted in, typically stay with the car. Contact the lender immediately with a list of items you need back. They must give you a reasonable opportunity to retrieve these belongings.
The 10-Day Redemption Period
You have only 10 days after receiving the sale notice to redeem your vehicle. Redemption means paying off the entire loan balance, plus repossession costs, storage fees, and any other charges the lender has incurred.
For most people, coming up with this money is impossible. If you owed $15,000 on your loan and the lender spent $1,500 on repo and storage fees, you’d need to pay $16,500 in cash within 10 days. This is where bankruptcy becomes a powerful tool.
The Deficiency Balance Problem
Let’s say your lender sells your repossessed car at auction for $8,000, but you still owed $15,000 on the loan. You now have a deficiency balance of $7,000 plus any repo and sale costs. Under Missouri law, the lender can sue you for this deficiency and get a judgment against you.
With a deficiency judgment, the lender can:
- Garnish your wages (up to 25% of your take-home pay in Missouri)
- Put liens on your other property
- Pursue collection activities for years
The sale must be “commercially reasonable” under Missouri’s Uniform Commercial Code. If your lender sells a car worth $10,000 for only $2,000 at auction without a good reason, you might be able to challenge the deficiency amount. However, proving commercial unreasonableness is difficult without an attorney.
How Bankruptcy Stops Car Repossession
Filing bankruptcy triggers something called an automatic stay. This federal protection, found in 11 U.S.C. Section 362, immediately stops nearly all collection activities. Repo companies must stop if they’re in the middle of taking your car when you file.
The automatic stay works like a legal shield around you and your property. Once your bankruptcy petition is filed with the court, creditors must stop:
- Repossessing vehicles
- Foreclosing on homes
- Garnishing wages
- Making collection calls
- Filing or continuing lawsuits
Your lender can ask the bankruptcy court to lift the stay and allow repossession anyway, but this takes time. It gives you breathing room to evaluate your options.
Getting Your Repossessed Car Back Through Bankruptcy
If your car was just repossessed and hasn’t been sold yet, bankruptcy might get it back. Speed matters here. Missouri bankruptcy attorneys often say you have about 21 days after repossession to file bankruptcy and potentially recover your vehicle.
Once you file, your attorney can contact the lender’s legal department and demand return of the vehicle under the automatic stay. Whether they’ll actually return it depends on several factors, including how quickly you filed and whether the lender has already scheduled an auction.
Chapter 7 Bankruptcy and Your Vehicle
Chapter 7 is the faster bankruptcy option, typically taking three to four months. When you file Chapter 7, you must decide what to do with secured debts like car loans. You have three main options.
Reaffirmation means you sign a new agreement with your lender. You agree to remain personally liable for the car loan even though you’re in bankruptcy. The debt won’t be discharged. You keep making payments as before, and you keep the car. This option works if you can afford the payments and want to keep this specific vehicle.
Redemption allows you to keep the car by paying its current fair market value in one lump sum, regardless of what you owe. If you owe $12,000 but the car is only worth $7,000, you could redeem it for $7,000 cash. The remaining $5,000 debt gets wiped out in bankruptcy. The challenge is finding $7,000 in cash, though some lenders offer redemption loans.
Surrender means you give the car back to the lender. The remaining debt gets discharged in your bankruptcy. You walk away owing nothing, even if there’s a big deficiency balance. This makes sense if the car payment is too high or you’re severely underwater on the loan.
In Missouri, you can protect up to $3,000 of equity in a vehicle if you’re filing individually. Married couples filing jointly can protect $6,000 total. Equity means the vehicle’s value minus what you owe. If your car is worth $10,000 and you owe $8,000, you have $2,000 in equity, which falls safely within the exemption.
Chapter 13 Bankruptcy Often Works Better for Keeping Your Car
Chapter 13 functions differently than Chapter 7. Instead of liquidating assets, you create a repayment plan lasting three to five years. This bankruptcy chapter offers several advantages for people who want to keep their vehicles.
You can catch up on missed car payments over time rather than paying everything at once. If you’re $3,000 behind on your car loan, your Chapter 13 plan can spread those missed payments across three to five years while you make current payments too.
Chapter 13 also allows you to keep making payments on your car while the bankruptcy eliminates other debts. You might discharge $30,000 in credit card debt and medical bills, freeing up money in your budget for car payments.
In some cases, Chapter 13 lets you reduce your car loan through what’s called a “cramdown.” If you bought your vehicle more than 910 days before filing bankruptcy, you might be able to reduce the loan balance to the car’s current value and potentially lower the interest rate. If you owe $15,000 on a car worth $10,000, you could restructure the loan to only pay $10,000 over your plan period. The remaining $5,000 gets discharged as unsecured debt.
How Bankruptcy Eliminates Deficiency Balances
Even if you can’t save your car, bankruptcy can eliminate the deficiency balance. That $7,000 the lender claims you still owe after selling your repossessed car? It’s unsecured debt once the car is gone. Both Chapter 7 and Chapter 13 can wipe out this debt.
In Chapter 7, the deficiency gets discharged along with your other unsecured debts. In Chapter 13, the deficiency becomes part of your repayment plan, but you typically only pay a percentage of unsecured debts. You might pay 10 cents on the dollar, and the rest gets discharged when you complete your plan.
This protection is significant. Without bankruptcy, that deficiency judgment can result in wage garnishment that reduces your paycheck by hundreds of dollars every month for years. Bankruptcy stops that collection before it starts or eliminates existing judgments.
When Should You File Bankruptcy to Save Your Car
Timing matters enormously. Here’s when bankruptcy makes the most sense for car repossession issues.
Before repossession happens. If you’ve received your Notice of Default and Right to Cure but can’t come up with the money, filing bankruptcy before the 20 days expire stops the repossession from happening. You then work out a plan to keep the car through Chapter 13 or decide whether to keep it through Chapter 7.
Immediately after repossession. You probably have less than 21 days before your lender sells the car at auction. Filing bankruptcy right away gives you the best chance of getting it back.
After you receive the deficiency notice. Even if the car is long gone, filing bankruptcy can eliminate that deficiency balance before the lender sues you for it.
Filing bankruptcy solely to delay inevitable car loss rarely makes sense. If you genuinely cannot afford your car payment and have no way to catch up, letting the car go and discharging the deficiency might be your best option. Bankruptcy should serve your long-term financial recovery, not just postpone the inevitable.
Other Ways to Avoid Losing Your Car
Bankruptcy isn’t your only option. Before filing, consider these alternatives:
Negotiate with your lender. Many lenders would rather modify your loan than repossess your car. They lose money on repossession and auction sales. Call them before you miss payments. You might get a payment deferment (moving payments to the end of your loan), a reduced payment plan, or a loan modification with lower interest.
Refinance through a different lender. If you have decent credit despite your current financial troubles, another lender might offer better terms. Credit unions often work with people who have temporary financial setbacks.
Voluntary surrender. This means you return the car to the lender yourself rather than waiting for repossession. You’ll still owe the deficiency, but you avoid repossession fees ($200 to $500 or more) and storage charges. Some lenders will negotiate the deficiency amount down if you surrender voluntarily.
Sell the car yourself. If you have time before repossession and the car is worth more than you owe, selling it privately almost always yields more money than an auction. You pocket the difference after paying off the loan. Even if you’re underwater, you might reduce the deficiency by getting a better sale price than the lender would get at auction.
Key Takeaways
- You get about 30 days’ notice before legal repossession can happen in Missouri
- Bankruptcy’s automatic stay can stop repossession immediately and protect you from collection
- You might be able to get your car back if you file bankruptcy within about 21 days of repossession
- Chapter 13 generally works better than Chapter 7 if keeping your car is your top priority
- Bankruptcy can eliminate deficiency balances even if you can’t save the car
- Repo agents must follow strict rules and cannot breach the peace during repossession
Frequently Asked Questions
Can the repo company take my car from my locked garage?
Not without a court order. Missouri law prohibits repo agents from breaking into locked garages or other secured spaces. If they do, the repossession is unlawful. However, if your garage door is open or the car is in your driveway, it’s fair game.
What if I’m making payments to someone who isn’t the original lender?
Your loan might have been sold to another company or assigned to a debt collector. You still have the same rights. The new holder must follow all Missouri repossession laws, including sending proper notices before repossession.
Will bankruptcy ruin my credit forever?
Bankruptcy stays on your credit report for 7 to 10 years, but many people start rebuilding credit within 12 to 18 months. A car repossession also damages your credit severely and stays on your report for seven years. If you’re already facing repossession, your credit is taking a hit regardless.
Can I hide my car to avoid repossession?
Missouri law doesn’t prohibit you from making it difficult for repo agents to find your car. However, if you hide it in a friend’s locked garage, you might be accused of conversion or fraud. This strategy usually backfires because the lender can get a court order (called replevin) forcing you to turn over the vehicle, and you’ll pay their legal fees.
How much does it cost to file bankruptcy in Missouri?
The court filing fee is $338 for Chapter 7 and $313 for Chapter 13. Attorney fees vary widely throughout the Kansas City area. Many bankruptcy attorneys offer payment plans, and some Chapter 13 attorney fees can be paid through your repayment plan.
What happens to my cosigner when I file bankruptcy?
Chapter 7 bankruptcy doesn’t protect your cosigner. If you discharge the car loan, the lender can pursue your cosigner for the full balance. Chapter 13 offers a “co-debtor stay” that can protect cosigners on consumer debts while you’re making plan payments. This is another reason Chapter 13 often makes more sense when you have a cosigner.
Can I buy another car after filing bankruptcy?
Yes, though you’ll face higher interest rates initially. Many people finance vehicles during Chapter 13 bankruptcy with court approval. After Chapter 7 discharge, you can buy or finance a car immediately, though you’ll need to rebuild your credit first for decent loan terms.
What if my car was repossessed because of someone else’s mistake?
Wrong car repossessions happen more often than you’d think. If your car was repossessed by mistake, contact an attorney immediately. The lender and repo company could be liable for damages. Document everything and take photos if your car or property was damaged.
Contact Us
Your car provides transportation to work, school, medical appointments, and everywhere else you need to go. Losing it can devastate your ability to earn income and maintain your daily life. The worst thing you can do is nothing. Ignoring notices from your lender won’t make the problem disappear. Each day you wait reduces your options and makes it harder to save your vehicle or protect yourself from deficiency judgments.
At Roach Bankruptcy Center, LLC, we help Kansas City residents stop repossession and protect their vehicles through bankruptcy. We’ll review your situation and explain your options clearly. Many times, we can file bankruptcy quickly enough to stop repossession or get your car back after it’s been taken. Even if saving your car isn’t possible, we can eliminate the deficiency balance and give you a fresh financial start.
Contact Roach Bankruptcy Center, LLC today for a free consultation. We’ll help you decide if bankruptcy is right for your situation and create a plan to move forward.
