Bankruptcy and Vehicle Insurance

Lawyer Nick GajewskiBankruptcy and insurance may seem to be unrelated topics at first glance, but insurance issues are common in many bankruptcy cases.  Not only is the Court involved if you’re going to be receiving insurance proceeds, but failure to keep insurance on your home or vehicle can actually result in the Court removing the bankruptcy protection from that asset.

Vehicle Insurance While in Bankruptcy

If you’re in a wreck or there is some other property damage that you suffer, your insurance company will look at the damage and at your insurance policy to determine the amount of funds you’ll receive.  If you’re in a bankruptcy case at the time, be sure to tell both your insurance agent and your bankruptcy attorney.  Any time an outside source is prepared to pay you a sum of money, the bankruptcy Court has to enter an Order directing how the funds are to be distributed.  In the case of a totaled vehicle, it’s common for the Court to Order the insurance funds to be used to pay the remaining balance of the debt on the vehicle and for the remainder of the money to come back to you.  Basically the situation plays out the same way as if there was no bankruptcy case, but the court Order is still required before the insurance company can pay out the funds.  The sooner you let your bankruptcy attorney know about the situation, the faster he or she can start the process to get court approval.

If you owe a debt on a house or a car, the creditor can insist you keep insurance coverage on the asset as part of the bankruptcy.  Since creditors are prohibited from any debt collection actions while you’re in bankruptcy, they have a right to know that the collateral on their loan will at least be protected.  If a creditor insists that you keep full coverage insurance on your car or house and you fail to do so, they can move the Court to remove the Automatic Stay that protects you.  That means they could potentially repossess your car or find your mortgage in default and begin foreclosure.

Your bankruptcy attorney should know all about the role insurance plays in your case.  If you’re considering bankruptcy and want to discuss your situation, please contact one of our convenient offices in Alabama, Tennessee, or Mississippi.  We offer free consultations with one of our experienced attorneys to help you resolve your financial problems.

Share This Page

Bond & Botes Law Offices

At Bond & Botes, we now offer full service bankruptcy consultation and filing over the phone or by video from the comfort and safety of your home or office. Please call 1-877-581-3396 or click here to setup your free phone or video consultation.

The lawyers at the Bond & Botes affiliated offices serve clients at offices in Anniston, Birmingham, Mobile, Montgomery, Opelika, Decatur, Huntsville, Florence, Haleyville and Gadsden, Alabama; Vicksburg, Hattiesburg and Jackson, Mississippi. Read our disclaimer here. You can view our Privacy Policy here.

Alabama Offices

Birmingham

2107 5th Avenue North
Age-Herald Building
Birmingham, Alabama 35203
Phone: (205) 802-2200


Shelby County Location
15 Southlake Lane, Ste 140
Birmingham, AL 35244
Phone: (205) 802-2200


Florence Location
121 S. Court Street
Florence, AL 35630
Phone: (256) 760-1010


Huntsville Location
225 Pratt Avenue NE
Huntsville, AL 35801
Phone: (256) 539-9899


Montgomery Location
311 Catoma Street
Montgomery, AL 36104
Phone: (334) 264-3363


Decatur Location
605 Bank Street
Decatur, AL 35601
Phone: (256) 355-2447


Haleyville Location
914 19th St.
Haleyville, AL 35565
Phone: (205) 486-3580


Gadsden Location
430-B Chestnut Street
Gadsden, AL 35901
Phone: (256) 485-0195


Opelika Location
216 South 8th Street
Opelika 36801
Phone: (334) 887-7666


Anniston Location
1302 Noble St #2C
Anniston, AL 36201
Phone: (256) 344-3559


Cullman Location
200 Second Avenue SW
Cullman, AL 35055
Phone: (256) 739-9866


Mississippi Offices

Jackson Location
5760 I-55 North, Ste 100
Jackson, MS 39211
Phone: (601) 353-5000


Hattiesburg Location
607 Corinne St, Ste B8
Hattiesburg, MS 39401
Phone: (601) 264-7200


Vicksburg Location
1212 Farmer Street
Vicksburg, MS 39180
Phone: (601) 353-5000

© 2024 by Bond & Botes Law Offices. All rights reserved. Disclaimer | Privacy Policy