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Claiming Bankruptcy And Keeping Your Car Complete Guideline

How to declare bankruptcy and keep your car– Before understanding how to keep your car in case of bankruptcy, it makes sense to understand what bankruptcy means in the first place. Bankruptcy usually refers to a situation wherein an individual runs out of liquid currency or liquidity, and is unable to repay his or her creditors with their liquid assets. In such a scenario, to repay the debts of the creditors, fixed assets and other items such as stocks and bonds of the debtor or the person who is filing for bankruptcy, is liquidated (or sold) to pay the debts. Given that a car is also a part of your assets, you may be worried and upset thinking that your car may also be leveraged or sold to meet your debts. However, there are certain ways to exempt certain assets, and this article will teach you how.

If you are unaware as to how bankruptcy works, or how the bankruptcy law in your state functions, the most important and the first step that you must take is to hire the services of a lawyer or hire any sort of legal representation. It is impossible to navigate the intricacies of bankruptcy law without being aware as to what it entails. In case you want a low-income bankruptcy lawyeryou can always find one in your vicinity. Apart from helping you how to file chapter 7 with no moneythey will also help you navigate the bankruptcy law while also ensuring that you get to keep your car with you, either under chapter 7 or under chapter 13 laws. Read on further to get a holistic understanding of how these laws work and what you need to do!

How To File Bankruptcy And Keep Your Car

how to file bankruptcy and keep your car

Declaring bankruptcy can be a difficult and stressful process, but it may be necessary if you are struggling to pay off your debts. If you are considering bankruptcy, it is important to understand that there are different types of bankruptcy and each one has its own set of rules and regulations. In this article, we will discuss how to declare bankruptcy and keep your car.

1. Types Of Bankruptcy

The first step in declaring bankruptcy is to determine which type of bankruptcy is right for you. The two most common types of bankruptcy are Chapter 7 and Chapter 13. Chapter 7 is known as a “liquidation” bankruptcy, while Chapter 13 is known as a “reorganization” bankruptcy.

2. Chapter 7 Bankruptcy

In a Chapter 7 bankruptcy, the court will appoint a trustee to sell your assets, including your car, to pay off your creditors. However, you may be able to keep your car if it is considered a “necessary” asset. In most states, there is a “wildcard” exemption that allows you to keep a certain amount of property, including your car, even if it is not considered a “necessary” asset. The amount of the exemption varies from state to state.

3. Chapter 13 Bankruptcy

In a Chapter 13 bankruptcy, you will not have to sell your assets, including your car. Instead, you will be required to pay off your debts over a period of three to five years. If you are current on your car payments and can afford to continue making payments, you will be able to keep your car. However, if you are behind on your car payments and can’t afford to catch up, the trustee may require you to surrender your car.

If you are considering bankruptcy and want to keep your car, it is important to speak with an attorney who specializes in bankruptcy law. They can help you understand the laws and regulations in your state and guide you through the process.

It is also important to note that if you are behind on your car payments, you may be able to negotiate with your lender to catch up on your payments. In some cases, the lender may be willing to work out a payment plan that allows you to keep your car.

Another important thing to consider is if you have a co-signer on your car loan. If you do, your lender may be able to go after them for the unpaid balance on the loan if the car is repossessed.

In conclusion, declaring bankruptcy can be a difficult and stressful process, but it may be necessary if you are struggling to pay off your debts. If you are considering bankruptcy and want to keep your car, it is important to speak with an attorney who specializes in bankruptcy law and understand the laws and regulations in your state. Also, try to negotiate with your lender to keep the car, and be aware of the consequences of having a co-signer on the car loan.

Can I Keep My Car If I File Bankruptcy

Before understanding how you can keep your car if you file a chapter 7 bankruptcy, it is important to understand what it is, what properties you are entitled to keep, whether you have made your payments, etc. It is also important to understand whether your specific equity is exempt as well. In chapter 7 bankruptcy proceedings, all of your non-exempt properties can be used to discharge your present debts. The question must be rolling in your mind that how to declare bankruptcy and keep your car . If your car, whether it is a new car or a used car does not fall under exempt property, it can also be sold at the market rate to recover costs and pay off the creditors.

It is also important to understand the difference between a secured and an unsecured creditor. A secured creditor is one whose debt is secured by an underlying asset, such as stocks, a house, bonds, etc. An unsecured creditor is one whose debt is not backed by, or secured by an underlying asset. During bankruptcy proceedings, the assets that are liquidated which do not fall under the assets that are previously used as securities for the debts of secured creditors, are used to pay off the debts of unsecured creditors.

File Bankruptcy And Keep Your House And Car

Now, in the world today, having a car is non-negotiable. Gone are the days when a car was considered a luxury. In today’s times, a car is an absolute necessity as a means of commute, especially in those areas where public transport is inaccessible or badly connected. Therefore, there is no doubt or no surprise that you will want to retain the ownership and custody of your car. Whether it is to drop your children in their school, to travel to work, or if you are a disabled person, the importance of having your vehicle cannot be overstated, and if it is taken away, the consequences are not ideal.

1. Purchase A Car From The Person Who Has Lent You The Car

One of the things that you can do in case of a Chapter 7 bankruptcy is to purchase a car from the person who has lent you the car loan at market rate, before filing for bankruptcy. This is especially ideal in circumstances wherein the value of the car that you have is lower than the value of the loan that you have taken. By doing this, you can keep the car in your custody relatively easily.

2. File a motion in the bankruptcy court

Remember, when you plan to do this, you must also ensure that you follow the procedures in place to be able to redeem your car and do not violate any bankruptcy proceedings. One of the first things that you will be required to do is to file a motion in the bankruptcy court pertaining to your intent to redeem. This is termed as a ‘motion to redeem’. If you are unsure as to how to file this motion or what filing it entails, you can always take the assistance of a lawyer. Once you have done this, you will be required to submit identification information and other documents that are requested/mandated by the court. This includes aspects such as lender information, as well as the value of your vehicle. Once you have taken these steps, you can redeem your vehicle. Keep in mind that the ability to exercise this option may only be possible in cases wherein the bankruptcy trustee has included your car as exempt from lump-sum sale. If you find that this option does not work for you, you can always consider a reaffirmation agreement.

Reaffirmation Agreement

A reaffirmation agreement, as the name suggests, is the affirmation of something again. It is a written contract between you and your creditors re-emphasizing your intent to repay, as well as a reiteration of the plan of payment. By signing a reaffirmation agreement, you will be, in essence, agreeing to discharge your loan obligations fully despite filing for bankruptcy. Given that you can negotiate the terms of a reaffirmation agreement, if you want to keep your vehicle, this is one of the best options that you can exercise.

The agreement works by excluding your car loan out of the purview of your bankruptcy agreement, wherein you will have to discharge your obligations of the loan, irrespective of the status of your bankruptcy. If you continue to fail to discharge your loan obligations, your car may be repossessed by the lender based on the terms of your original loan agreement, with the changes that the parties have agreed to in the reaffirmation agreementIt is important to note that legally, to effect any changes per the reaffirmation agreement, the written consent of both parties is required.

How Do I Keep My Car In Case Of A Chapter 13 Bankruptcy? 

If your car has a high equity value, there is no need to worry as it is easy to retain custody of the car in case of a Chapter 13 bankruptcy filing. How to declare bankruptcy and keep your car, remember, that you will have to keep up with the required payment schedules of your car loans to keep your car. One might wonder what the flip side of this is, and something that you should think about is the high rate of interest in this scenario. You should ensure that the interest you end up paying does not end up exceeding the actual value of your car.

If I File Chapter 7 Can I Keep My Car

If you file for Chapter 7 bankruptcy, you may be able to keep your car depending on the laws and regulations in your state. In Chapter 7 bankruptcy, the court appoints a trustee to sell your assets in order to pay off your creditors.

if i file chapter 7 can i keep my car

However, there are exemptions that allow you to keep certain assets, including your car, even if they are not considered “necessary” assets. These exemptions vary from state to state, but many states have a “wildcard” exemption that allows you to keep a certain amount of property, including your car.

1. Car is covered by the exemption

If your car is covered by the exemption, you will be able to keep it. However, if the value of your car exceeds the exemption amount, the trustee may sell it to pay off your creditors.

2. Have a car loan

If you have a car loan, it is also important to note that if you are current on your payments and can afford to continue making payments, you will be able to keep your car. But if you are behind on your car payments, the trustee may require you to surrender the car.

It’s crucial to speak with an attorney who specializes in bankruptcy law, they can help you understand the laws and regulations in your state and guide you through the process, also they can help you to determine if your car is covered by the exemption and if you will be able to keep it.

Is The Equity Of My Car Exempt? 

Now that you have understood a broad overview of what a Chapter 7 Bankruptcy entails, the next obvious question that anyone will ask is as to whether their car is exempt, especially in terms of equity value. Now, what does this mean – if you owe someone say a 100$, and your car is valued at a sum of 10$, the value of the car is a 100$-10$, equalling a sum of 90$. Depending on the facts and the circumstances of each case, the court determines whether or not the equity value of your car is exempt from being sold, and used to pay off the creditors. It is important to ensure that the value of your car falls within the amount that is exempted to ensure that your car is not liquidated to pay off the debts. If the equity value of your vehicle exceeds the amount granted as an exemption to your car, then the trustee handling the bankruptcy is likely to sell the car to recover the amount and pay off the unsecured creditors. If there is any amount that is remaining post payment of the creditors, you are allowed to retain such an amount.

Do You lag Behind In Making Payments?

The second important facet after understanding how car equity works are to determine if you are currently lagging behind in payments. If you are the owner of the exempted property, you do not have to make payments, but this is only so as long as you meet the payment schedules in time. If you find yourself lagging in payments and you have not yet cleared your debts, you might end up losing your vehicle even if it falls under the category of exempted property. Ensure that you do not find yourself in this predicament as if this happens, it might be difficult for you to retain the ownership of your car.

Conclusion 

Therefore, if you are wondering how to keep your car despite filing bankruptcyyou will be happy to see that you have a plethora of options in front of you. Ensure that you weigh the pros and cons of each of these options and select one that suits you the best.

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Christopher SIns

With an illustrious career spanning both the automobile industry and intricate realms of government programs, Christopher Sins has emerged as a respected voice and authority on CarsForYourHelp. Holding a Master's degree in Automobile Engineering from the prestigious University of Chicago, her academic foundation is as robust as her practical insights. Christopher's profound understanding of vehicles, combined with her nuanced grasp of government initiatives, has made her an indispensable asset to our readers. Through her writings, she not only offers a wealth of knowledge but also a promise of credibility and trustworthiness. When you read a piece by Christopher, you are not just getting information; you are receiving the culmination of years of experience, passion, and dedication.
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