Repossession of Vehicles in Indiana

In Indiana, when car payments are missed, the law allows the lender of the car loan to repossess the vehicle. This means that upon default the lender can just walk up and take a car from a driveway without permission.

A lender, without notifying you of its intention to repossess the vehicle, can show up and take the vehicle, even if the vehicle is on private property. A lender, however, cannot "breach the peace" while repossessing the vehicle. Breaching the peace includes actions such as breaking and entering a locked garage, impersonating a law enforcement officer, and engaging in or threatening a physical altercation.

Once the vehicle has been repossessed, the lender has the right to sell the vehicle. But, before doing so, the lender must notify the borrower of the sale. And, if the sale of the vehicle doesn't satisfy the entire debt, the lender could still sue the debtor for the deficiency (difference between what is owed and the price received at the sale).

Therefore, once a debtor falls behind on car payments, it is important to investigate the steps that can be taken to prevent car repossession. Commonly, there are two types of bankruptcy protection that a debtor may turn to:

• Chapter 7 bankruptcy - known as liquidation, could be used to free up enough money so that the debtor is able to make his or her monthly payments, after repaying any missed payments.
• Chapter 13 bankruptcy - allows the debtor to restructure debts into a payment plan that lasts three to five years. The debtor can use the life of the Chapter 13 payment plan to catch-up on any car payments missed prior to filing for bankruptcy.

Bankruptcy may not be the only option you have for preventing repossession or may not be the right step for you to take. To discuss the options for keeping your vehicle that are right for your situation, speak with an experienced bankruptcy attorney.

Sources: Vehicle Repossession