If you need to file Chapter 7 and you own an automobile, what happens to the car will depend on whether it is under a loan -; and whether you can really afford to maintain it. If you owe no money on the vehicle, you may pay to keep it, unless its value is exempt. If money is owed on it, you must tell the court whether you plan to surrender or redeem the vehicle, or reaffirm your debt. Below, Lake Law Office, PLLC will discuss options for the handling of automobiles during Chapter 7 bankruptcy.
Loan-Free Cars
If you owe no money on your vehicle, it becomes part of the bankruptcy estate. The court-appointed trustee’s duty is to sell the estate property and use the proceeds to satisfy creditors. US bankruptcy law allows you to exempt some property, keeping it from being included in the estate. Most states allow you to protect a certain amount of a vehicle’s value; if you can exempt the entire amount the trustee will allow you to keep the car. A Chapter 7 Attorney at Lake Law Office Huntersville can sit down with you and review your options.
Reaffirming the Loan with the help of a Chapter 7 Attorney in Huntersville NC
If you have a loan on your vehicle, you can reaffirm that debt during a Chapter 7 case. In reaffirmation, you’ll sign papers with the lender, agreeing to remain liable for the loan amount in exchange for retaining the vehicle. If you sign such an agreement and get a discharge without first rescinding it, you are still liable for the debt.
Redeeming the Vehicle
Your second option for keeping your car that’s under a loan is through redemption. If you decide to go this route, you must offer to give the lender a lump-sum payment equal to the car’s current market value, even if that’s less than you owe.
Surrendering the Vehicle
If you cannot afford continued payments, you have the option to surrender the car. Here, you’ll return the car to the lender and the entire debt will be discharged during your Chapter 7 case. Your creditor will either wait until the case is over to repossess the vehicle, or they will file a court motion to do so. If you are considering bankruptcy but need to keep your car, consult a Chapter 7 Attorney in Huntersville NC for advice.
