If there is a lapse in an auto insurance during bankruptcy, can the vehicle be repossessed?

UPDATED: Mar 1, 2012

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If there is a lapse in an auto insurance during bankruptcy, can the vehicle be repossessed?

Court has already ruled on payment amount and are awaiting payment but now they let their insurance lapse. What can I, as the lienholder do?

Asked on March 1, 2012 under Bankruptcy Law, North Carolina


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

If the debtor has allowed the insurance policy on the car that you have a lien to lapse and under the security agreement the insurance policy must be at all times in effect, you need to file a petition with the bankruptcy court advising it of such as a violation of your security agreement with a request that you can then repossess the car.

Assuming the court rules that there has been a breach of the security agreement due to failure to keep the insurance intact, you could very well be allowed to repossess the car if the insurance policy is not brought current.

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