Auto Insurance during Chapter 7 BK..does automatic stay apply???

[twiz88]

Need some advice. How does Chapter 7 BK affect my auto insurance?? I'm with Geico Auto Insurance and they sent me a letter to cancel my policy if I don't pay the balance due. I do plan to pay however it will be after the date of cancellation on the notice. I had a family emergency that tied up finances. Does automatic stay apply to auto insurance? I don't see too many post on this topic. Thank You

[keepmine]

I wouldn't think the stay would apply since they're canceling for non payment of a service.
Prehaps call them and see if you can workout some sort of hardship plan.

[Pizza]

You really don't want a gap in coverage either.

[bcohen]

I do not think the automatic stay will protect you from having the insurance policy canceled, as this is different from repossessing an item, or pursuing collections action. If you truly cannot pay, then the policy will be canceled, the bankruptcy will discharge any balance owed to the insurance company (if any), and then when you can pay, you can apply for a new policy with some insurance company. As long as you don't get into an accident, or stopped by police, I am not sure that a gap in coverage of a few weeks or whatever will really matter that much. Of course, if the car is financed, once the lienholder is notified that the policy has been canceled, they will try aggressively to repo, so make sure the car is stashed in a LOCKED GARAGE at all times until the bankruptcy is filed. Then, the automatic stay will protect you.

[AngelinaCat]

Need some advice. How does Chapter 7 BK affect my auto insurance?? I'm with Geico Auto Insurance and they sent me a letter to cancel my policy if I don't pay the balance due. I do plan to pay however it will be after the date of cancellation on the notice. I had a family emergency that tied up finances. Does automatic stay apply to auto insurance? I don't see too many post on this topic. Thank You

Call your representative and explain the circumstances and that you will be paying just as soon as you can.

There is a thread or two wherein the posters have announced that they are firing the Geico.

We never had the question arise about the automatic stay and our insurances. We were paying both the house and auto insurance on their regular schedules.

ETA: the "we" here refers to my 'Hub and I. On re-reading this, it appeared that I was referring the membership here at BKForum; not so.

[justbroke]

Insurance "could be" protected by the automatic stay, but that's typically where the property is still property of the Estate and there may be a claim against the insurance pending (where the Trustee has an interest).

As stated by bcohen, I'd be careful about any lapse in insurance for many reasons. First, that you could not legally operate the vehicle upon the roads and highways of any State in the United States, and secondly, and more importantly, your legal liability should an accident occur, would be post-petition and non-dischargeable.

Please call them and explain the situation and see if you can get an extension of time to pay.

[kornellred]

Automobile insurance is not a debt. It is an expense. If you do not pay the premium, you are not insured. Simple as that.

[twiz88]

I do not think the automatic stay will protect you from having the insurance policy canceled, as this is different from repossessing an item, or pursuing collections action. If you truly cannot pay, then the policy will be canceled, the bankruptcy will discharge any balance owed to the insurance company (if any), and then when you can pay, you can apply for a new policy with some insurance company. As long as you don't get into an accident, or stopped by police, I am not sure that a gap in coverage of a few weeks or whatever will really matter that much. Of course, if the car is financed, once the lienholder is notified that the policy has been canceled, they will try aggressively to repo, so make sure the car is stashed in a LOCKED GARAGE at all times until the bankruptcy is filed. Then, the automatic stay will protect you.

Thanks I talked to them and they gave me a few days to take care of the balance and I wont have a lapse in coverage....Thanks

[twiz88]

Thanks for all the responses Geico gave me a few more days to gather the money which I did now everything is ok. Thanks