In a ruling that agrees with most other courts, the U.S. Court of Appeals for the Second Circuit held that a creditor who repossesses a car or truck must return it if the owner files chapter 13 before it is sold. If you car was seized, you may have your car returned through a chapter 7 or chapter 13.
Because state law determines the rights of an auto owner after repossession, owners in some parts of the country may not have the right to demand turnover. But in Michigan where I practice, the courts agree with Weber. So an owner can reclaim a repossessed car and pay for it – or sometimes pay its value, if less – through a chapter 13 plan.
Chapter 13 can be an expensive and cumbersome process. An attempt get back a repossessed car, without more, will rarely justify filing bankruptcy. But if an auto owner has other reasons to consider bankruptcy – if he is behind on a mortgage or has a substantial amount of unsecured debt – the advantage of saving the car may make chapter 13 appealing.