Is it possible to prevent the bank from repossessing a recreational vehicle (RV) by filing for bankruptcy? Filing for Chapter 7 bankruptcy makes it possible to save your home, but can it do the same thing for an individual or family who uses their RV as their primary residence? Can a Chapter 7 bankruptcy protect them from repossession or are they out of luck?
While filing for Chapter 7 bankruptcy can help filers save their home, it doesn’t do the same for the recreational vehicle even if it’s being used as a residence. The lender can repossess the RV and leave the previous owners on the street. They don’t care if it’s being used as a primary residence. It’s harsh, but it’s the truth. The Chapter 7 is not going to provide you with a solution to this particular problem.
Luckily for you, the Chapter 7 isn’t your only option. If you were attempting to prevent your RV from being repossessed, you would be better served by filing for a Chapter 13 bankruptcy. The Chapter 7 bankruptcy can’t help solve this particular problem because the payments are delinquent (or there would be no threat or repossession in the first place). Using the reorganization bankruptcy or Chapter 13 bankruptcy, you can pay back your RV payments over the course of the bankruptcy court determined payment plan period (typically three to five years).
If you want to use Chapter 13 bankruptcy to save your RV, you need to make all your regular RV payments each month after filing your bankruptcy case with a payment to the court-appointed Chapter 13 trustee. Your bankruptcy trustee will send the payment on to the lender, which will bring the loan current, and you will emerge at the end of your Chapter 13 payment plan current on your previously defaulted RV loan.
If you have the additional problem of owing more than the vehicle is worth, you might be able to lower the loan balance to reflect fair market value (as long as you can pay off the fair market value of the RV during the course of your payment plan term). This option is often referred to as a “cramdown.” The lender will, of course, prefer NOT to write off the additional amount over and beyond fair market value and will try to push up the payoff. To improve your chances of obtaining a cramdown, you should consider getting an appraisal prior to filing.
Contact an experienced southern California bankruptcy attorney as soon as possible if you are in a difficult financial situation and need to discuss the options that come with filing for bankruptcy.