Raleigh Bankruptcy Lawyer for Equipment and Vehicle Loan Defaults and Repossessions
If you’re at risk of a lender repossessing your vehicle or equipment after defaulting on a loan, contact Bradford Law Offices, PLLC immediately. We can review your case and determine whether filing for bankruptcy can protect the property you use to operate your business.
Many companies depend on certain equipment and vehicles to provide services and products to customers. You can’t operate without them. Unfortunately, if you default on a loan, the lender could repossess these items and claim ownership over them. This could leave you without the property you need to keep your business running as usual.
Although filing for bankruptcy seems scary, it might be your only option. You could pursue a case in court to avoid repossession proceedings. You might be able to work out a repayment plan with the lender, so you can pay back the money you owe without losing your equipment and vehicles. However, you must meet specific requirements and file under the correct chapter during bankruptcy proceedings.
The Raleigh business bankruptcy attorney of Bradford Law Offices, PLLC understand the uphill battle you face. You don’t want to lose your business or operate without the necessary property while sorting out your debt. We can assist you with the legal process and determine the best methods of protecting your assets and business.
For a confidential consultation to learn more about what we can do for you, call us at (919) 758-8879 or reach out to us online.
Using Equipment and Vehicles Obtained from a Lender
Many business owners can’t afford to buy the necessary equipment to perform daily tasks. Sometimes, they rent equipment, such as office printers, machinery, and other property. Renting equipment means entering into a legal contract with a vendor. Depending on the terms of the agreement, businesses can use the equipment by making monthly payments. Alternatively, the business owner might take out a loan to purchase the equipment they can’t pay cash for.
The same is true for motor vehicles. Some companies need to lease or finance cars, trucks, and other modes of transportation to deliver products, meet clients for appointments, and complete other job-related responsibilities. Leasing or financing an automobile requires paying the lender on a monthly plan based on the terms of the contract.
As long as you make payments every month on time and in full, you can continue to use the vehicles and equipment that are under contract to you. However, if you default on the loan, the lender could pursue legal action and file a motion with the court to take back possession of the property. Avoiding repossession and disruption to your business might require filing for bankruptcy.
Bankruptcy Options After Defaulting on a Vehicle or Equipment Loan
North Carolina law allows lenders to start the process of repossession after only one missed payment. That means if you fall behind during the rental period, you risk losing the equipment or vehicle vital to your company’s success.
You could file for bankruptcy, allowing you to keep your property while working out a repayment plan and even preventing the lender from taking any collections actions against you. The available options depend on the type of bankruptcy you file for and whether you qualify to do so.
Chapter 13 Bankruptcy
If you face a possible vehicle repossession, you could file for Chapter 13 bankruptcy. This type of bankruptcy offers some relief while you get your finances in order. Filing for Chapter 13 gives you the ability to create a repayment plan with the lender so you can pay back the money you owe without additional penalties.
You have the opportunity to restructure the loan with a repayment plan. The plan could include lower monthly payments, an extended lease term, and other conditions. Once you file, the court will place an automatic stay on the property to prohibit the lender from attempting to collect the debt.
Filing can also prevent the lender from repossessing your vehicle or equipment during your ongoing bankruptcy case. However, you must prove the property in question is essential to the business. For example, you need to keep your vehicle fleet if you provide transportation services.
If the judge enters a judgment in your favor, you won’t have to give up the property. However, you might still be responsible for missed loan payments.
Chapter 7 Bankruptcy
If you file for Chapter 7 bankruptcy, you can liquidate your assets for debt forgiveness or relief from the lender. However, that means you must use some or all your assets to satisfy your debt amount. You could lose the property you need to keep your company intact. That could include your equipment and motor vehicle.
However, you might have the option of redeeming the property. With this option, you can work out a new loan with the lender and pay for the value of the vehicle or equipment instead of the actual amount of debt you have. This allows you to keep your property and potentially pay even less than you would have under a repayment plan.
The court will appoint a trustee to manage and sell the assets you own. They can distribute the proceeds from the sale of your assets to the equipment or vehicle lender to pay back the money you owe for the loan.
However, you might not have the assets you need to continue running your business. This type of bankruptcy is most beneficial for owners preparing to terminate their companies.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy allows restructuring of the debt. You can continue to operate your business while you negotiate an agreement with the lender. Instead of selling your assets to pay past-due bills, you can reorganize your debts to determine how to repay the money you owe with future earnings from your business.
Filing under Chapter 11 makes sense if you want to avoid disruptions to your company’s schedule. You can keep providing your products or services to customers while working off the debt you incurred from defaulting on a vehicle or equipment loan. Although you must use your profits to satisfy the missed payments, you could keep your business afloat and help it be successful in the future.
Repossession Laws in North Carolina
State law doesn’t require lenders to notify borrowers before repossessing property. That means if you missed payments on your vehicle or equipment loan, the repossession company could take them back without informing you first.
You could show up for work to find your vehicle missing from the parking lot. If you have personal property inside your commercial car or truck, you will have to work out a way to get it back from the repossession company.
However, some contracts contain a clause requiring creditors or lenders to provide notice. You should review your agreement to determine your rights. Even if the lender doesn’t have to go through the court for repossession, they’re not allowed to take your property if it’s behind a locked storage unit, gate, or another secure structure. Repossession companies also can’t use acts of violence or threats while removing your equipment or vehicle from your commercial property.
How Bankruptcy Works in North Carolina
The type of bankruptcy you filed for will determine the steps you must take to initiate your bankruptcy. It can be a complicated process to take on alone. You should contact Bradford Law Offices, PLLC for a Raleigh bankruptcy attorney to advise the best options and guide you through each step.
Before you can begin your case, you need to determine whether you qualify for bankruptcy. You have to meet specific conditions under each chapter before filing with the court.
- You can file your bankruptcy petition with the appropriate court to begin the process. The court might order an automatic stay to protect you from legal action by the lender while you’re handling your case.
- You must outline your assets, liabilities, income, and other documentation showing your financial standing.
- If you file for Chapter 13 bankruptcy, you will need to file a repayment plan for the court to approve. A reorganization plan is necessary when filing for Chapter 11 bankruptcy.
- If you decide to pursue a Chapter 7 case, the court will appoint a trustee to liquidate your assets. During Chapter 13 and 11 bankruptcies, the court and lender will review your repayment or reorganization plan.
Once the court makes its decision, you must meet the requirements of the order. If the court rules in favor of the lender, they could repossess your vehicle or equipment and require you to pay back the full amount of money you owe.
Bradford Law Offices, PLLC knows how overwhelming it can be when you decide to file for bankruptcy. You might worry about ceasing operations or losing your business entirely. However, this could be the most effective option to keep your equipment or vehicle while paying off your debt.
We have represented business owners in Raleigh since 1996. We bring our experience, knowledge, and resources to every case to meet our client’s needs. When you hire us, you can count on our legal team to protect your rights and try to reach the best possible outcome for your case.
If you default on a loan and risk repossession of your commercial equipment or vehicle, call Bradford Law Offices, PLLC at (919) 758-8879 for your confidential consultation. Let a trusted and experienced Raleigh bankruptcy lawyer help you out of the hole you’re in and secure your company’s future.