BOOK A FREE CONSULTATION NOW!
In Hurry? Dial +12-135-960-265 Now!
You may be drowning in debt, or simply managing an increasing amount. One of your first questions will be: Can I file bankruptcy and keep my vehicle? Maybe you don’t often give it much thought as you drive to work, to pick up your kids or to run errands, but that car has big role in your daily life. You take it from home to work, the children to school, and for all of life’s errands. It’s part of your daily routine that will never end. Think about this: Can you keep it?
This will depend on whether you filed Chapter 7 bankruptcy. We explain below the differences between Chapter 7 and Chapter 13 bankruptcy. In addition, we demonstrate how much your vehicle might be worth based on California bankruptcy exemptions.
It Explains How a Chapter 13 Bankruptcy Works as Follows:
Under Chapter 13 bankruptcy, you, the creditors, and the court actually work together on a plan with one another. It’s somewhat confusing; however, in most cases, you will be able to pay off your car loan. If you are also behind on an auto loan, you will be able to pay that back with your plan payments as well. In most cases, Chapter 13 debtors pay off their cars through the plan.
Chapter 7 Bankruptcy Works this Way
Under Chapter 7 bankruptcy, the bankruptcy trustee will liquidate all your non-exempt assets and hand over and proceeds to creditors. Under this bankruptcy chapter, two factors will determine what will happen to your car, thus what happens depends on whether you can service your payments and know how much value your car has.
Can You Afford Your Car?
You can reaffirm your deal with your creditor when you file bankruptcy and keep your automobile in exchange. Most forms of bankruptcy will release you from liability for paying a debt. When you sign a reaffirmation agreement, you agree to being responsible for the debt. This pulls your automobile out of bankruptcy. You keep making the regular payments and remain the owner of your automobile. So don’t think too much about “Can I File Bankruptcy and Keep My Car”.
Another good way to save your car through bankruptcy is a reaffirmation agreement. So, you are wondering whether you can file for bankruptcy and keep your car? A reaffirmation agreement may be your way out. First of all, a debt that you elect to reaffirm cannot be discharged in bankruptcy, meaning you are committed to paying it. For example, you need to prove that holding on to your vehicle is not an “undue burden.” However, in cases where the courts feel that you can no longer afford to own the car, they may deny your reaffirmation agreement. This is taken into account with your income and other debt commitment obligations. The courts must then decide if you will be left with at least a minimum standard of living with an ability to sustain a monthly payment schedule so that it won’t disrupt your funding of the automobile.
BOOK A FREE CONSULTATION NOW!
In Hurry? Dial +12-135-960-265 Now!
Do You Know How Much Is Your Car Worth?
As discussed above, when you file under Chapter 7 bankruptcy, the trustee will liquidate your non-exempt assets and pay the proceeds toward your unsecured debt. Equitable property may be exempt by state, which means it varies – referring to the equity in the property. Therefore, if you purchased a car for $7,000 but still owe $5,000 on it, you have $2,000 in equity.
You get to choose exemptions that are allowed in your California property:. In System 1, you can exempt up to $3,050 of the equity in your vehicle. On System 2, you can exempt up to $5,350 of the equity in your vehicle. You cannot mix and match the two, and California does not allow filers to use the federal bankruptcy exemptions. You should know that the exemption amount in California keeps on changing and you should seek your attorney to fill in what is the actual amount.
Calculate How Much Equity Is in Your Vehicle Now
If the equity is less than the exemption amount then it cannot be sold by the trustee. This means if you have more equity than the exemption amount then it might be sold by the trustee and you will get cash for the exemption amount to be paid. If you have too much equity but still wish to retain your vehicle, then you have two choices. You either pay the trustee the difference of how much equity you have over exemption or reaffirm your auto loan.
Can I File Bankruptcy and Keep My Car ?The bottom line!
You can hold onto your car up to Chapter 13 if you’re up to date on your payments. At the time of application, on can I file bankruptcy and keep my car? it will depend on the case of being able to make payments, as well as the worth of your vehicle and whether you will get to keep the car with Chapter 7. This decision is critically driven by the implementation of your selected exemption package, which also extends beyond cars but across homes, cash, insurance policies, personal belongings, and much more. Both types of bankruptcy are followed to protect different distributions of assets.
Are You Considering Bankruptcy?
Tenina Law will arrange a free consultation with one our bankruptcy attorneys to discuss your situation, your goals and your options. The bankruptcy specialist may be able guide you to bankruptcy if you are interested in it. Call us today for a free consultation.
