One of the most common questions we get asked concerning Chapter 7 bankruptcy is, “What will happen to all of my stuff?” More specifically, many people thinking about filing for bankruptcy protection are worried about what will happen to their car during Chapter 7 bankruptcy.
Your Car During Chapter 7 Bankruptcy
In effort to alleviate your concerns, we will provide a brief summary of the different ways bankruptcy may affect your car.
First, once you file bankruptcy, an automatic stay is immediately issued, effectively halting any repossession actions taken against you. That means that the repo men should be stopped in their tracks.
After you’ve filed your petition for bankruptcy, it’s decision time. Depending on whether or not you want to keep the vehicle, there are a few different options that may be available to you.
If you do not plan on keeping the vehicle, it will likely be sold by the bankruptcy trustee in order to settle some of your debts. If the car is collateral on a loan, the creditor who owns the loan will probably take the car.
If you want to keep the car, there are a few ways to do so. The first is to use the federal or state bankruptcy exemptions to protect your car from being sold by the trustee.
If your car is too valuable to be exempted by the bankruptcy exemptions, you may still be able to keep the car by reaffirming your debt. That means that you will essentially forfeit your right to a discharge of some of your debt, making this option the least ideal.
Redemption may be another available option. Redemption allows you to pay off the value of the car in a lump sum to the trustee. However, most people who are looking to file Chapter 7 bankruptcy do not have the means to pay off a car in full.
Another option is to negotiate a deal with the creditor to continue paying for the car even after the debt has been discharged. Many lenders will be open to a deal of this type since they aren’t likely to recover any money at all from you if your debt is discharged. Talk to your lender to find out if they would be open to a deal of this type.
The best way to get what you want out of bankruptcy is to hire a bankruptcy attorney. Bankruptcy lawyers have a wealth of knowledge concerning every loophole and obscure exemption that could help you save most or all of your assets.
Call or fill out an online form today for a free consultation, and find out how the Lewisville bankruptcy lawyers at Shuster Law Firm PLLC can help you achieve your goal of becoming debt free.