Introduction: When You’re Behind on Car Payments
For most Minnesotans, a car isn’t a luxury, it’s a necessity. Between work, school, and winter weather, losing your vehicle can upend your entire life. If you’ve missed payments, you may already be worried about repossession. Lenders in Minnesota can repossess a car quickly once you’re in default, and once it’s gone, it’s hard to get it back.
The good news: bankruptcy in Minnesota can stop repossession immediately. Chapter 13 is especially powerful for protecting vehicles and even restructuring loans. This guide explains how repossession works, what bankruptcy can do, and why timing matters.
How Car Repossession Works in Minnesota
Under Minnesota law:
If you default on a car loan, the lender has the right to repossess without notice.
They can send a tow truck to your home, workplace, or even a public street.
After repossession, the lender may sell the car at auction and sue you for the deficiency (the amount still owed after the sale).
Repossession moves quickly, and lenders usually don’t need a court order first.
How Bankruptcy Stops Car Repossession
The Automatic Stay
The moment you file bankruptcy, the court issues an automatic stay that immediately halts repossession. That means:
If the lender hasn’t taken your car yet, they must stop.
If your car has been repossessed but not yet sold, you may be able to get it back.
Chapter 7 Bankruptcy
Stops repossession temporarily.
If you’re current on payments, you may keep the car.
If you’re behind, you may need to reaffirm the loan (agree to keep paying) or surrender the vehicle.
Chapter 7 is best if you want to wipe out unsecured debts and possibly walk away from an unaffordable car loan.
Chapter 13 Bankruptcy
Stops repossession immediately.
Lets you catch up on missed payments over 3–5 years.
May allow a “cram down”: if the car is worth less than what you owe and the loan is old enough (usually 910+ days), you pay only the car’s value, not the inflated loan balance.
Keeps you in control of your vehicle and repayment terms.
For most Minnesotans facing repossession, Chapter 13 is the stronger tool.
Example: Saving a Car Through Chapter 13
“Anthony,” from Maple Grove, fell four months behind on his car loan after medical expenses piled up. The lender scheduled repossession.
By filing Chapter 13:
The repossession was stopped immediately.
His $1,600 in missed payments were spread over 60 months ($27/month).
Anthony kept his car, reduced his debt, and rebuilt his financial stability.
Why Chapter 13 Is a Lifeline for Car Owners
Catch up arrears without immediate lump-sum payments.
Restructure loans so they match your car’s actual value.
Protect co-signers from collection efforts.
Bundle other debts (credit cards, medical bills) into one manageable payment.
Instead of losing your car, Chapter 13 gives you a plan to keep it.
What Happens If You Do Nothing
If you don’t act, repossession and deficiency judgment can spiral:
You lose your car and any equity you’ve paid in.
You may still owe thousands on the deficiency.
Your credit takes another hit.
You’re stuck scrambling for transportation in a state where a car is essential.
Bankruptcy stops this spiral in its tracks.
Common Myths About Car Repossession and Bankruptcy
“They’ll just take my car back after I file.” – False. The automatic stay legally blocks repossession.
“I can’t afford to catch up.” – False. Chapter 13 spreads arrears over years, making repayment manageable.
“I’ll never get another car loan.” – False. Many people finance vehicles a few years after bankruptcy.
“Once repossessed, my car is gone forever.” – Not always. If it hasn’t been sold yet, bankruptcy may help you get it back.
Conclusion: Keep Your Car, Keep Your Stability
Losing your car in Minnesota doesn’t just mean inconvenience, it can mean lost jobs, missed appointments, and financial chaos. Bankruptcy may give you the lifeline you need.
In Minnesota and ready to talk about stopping a repossession with bankruptcy?
Schedule a free consult with bankruptcy lawyer Todd Murray.
Since 2009, Todd has helped hundreds of Minnesotans get out of debt. His work has saved his clients millions of dollars (and many sleepless nights) in the process. Todd’s clients have described him as “very professional and easy to work with.” He lives in Minneapolis with his wife and four children.