Surrendered Property In a Chapter 13

I have Debtors that will want to file a Chapter 13 bankruptcy and will want to surrender either a house or car in the bankruptcy. When this occurs, the typical question asked by most Debtors is “how long do I have to keep the property?”

The answer to the question varies greatly depending on the creditor and the type of property being surrendered. According to an order of the court, the stay will automatically be lifted on the sixth business day after the Chapter 13 bankruptcy plan has been filed with the court.

If the property is a car, most likely the car creditor will try and contact the Debtor to work out arrangements to get the car, but if they don’t hear anything they will be allowed to repossess the car without further notice to the Debtor. I had a client call very angry that is truck was repossessed because he has expensive equipment in the truck. Once a Debtor makes the decision to surrender a car, they need to make sure there are no personal belongings left in the vehicle and to call the creditor to make arrangements to drop off the vehicle or have them come pick it up. This is the easiest way so a Debtor doesn’t plan on having the car and the car is gone in the morning.

If the property being surrendered is a house, the creditor will still have to follow all the procedures to have the foreclosure sale, which includes notifying the Debtor of their intent to foreclose. In Texas, foreclosures occur the first Tuesday of the month. By knowing this, it gives the Debtor a better idea of when they will need to be out of the house.

The main thing to understand, creditors no longer have to file a motion to lift the automatic stay for property that has been surrendered in the Chapter 13 bankruptcy.

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