What You Need To Know About Your Car And Chapter 7 Bankruptcy
If you're considering bankruptcy, it can be nerve-wracking to wonder what might happen to your vehicle. Understanding the laws in place in bankruptcy court can help you make the best decisions possible regarding your finances and situation.
When You Own Your Car
If your car is fully paid for, you may not have anything to worry about. Many states offer exemptions for personal property in bankruptcy. These provisions often include exemptions for a modest vehicle. These exceptions are usually an amount of equity you have vested in the car.
Your car's value will be based on its value as if you were to sell it today. This means that if your car's value has dropped, or its condition has affected its value, your car may be considered worth more or less based on those factors.
When You're Paying For Your Vehicle
When you're paying for your vehicle, things can become a little trickier and there are a variety of things that can happen:
- Surrender: This is when there is no feasible way you can pay for your car, it will go back to the creditor and the debt will be discharged. One the bankruptcy paperwork, you will only have to check a box next to the statement saying you intend to surrender.
- Redeem: Redeeming a car in bankruptcy is when you have the ability to purchase your car at fair retail value. You pay the credit the fair retail price of your vehicle, and the remaining debt is discharged.
- Reaffirmation: Reaffirmations allow you to continue with a payment play on your vehicle. There is room for negotiation and you may have the chance to renegotiate for a better deal on your car.
Most of these options are available when you're current on your payments. However, if you are behind on your payments some of these options may not be available. It is worthwhile to note, that many lenders don't want to deal with a repossession. Lenders tend to lose a lot of money in the process and may be more eager to negotiate than you expect.
Getting Your Desired Outcome
Getting your desired outcome from your bankruptcy requires help. If you're worried about your bankruptcy and are concerned what may happen to your vehicle, reach out to a bankruptcy lawyer. An experienced bankruptcy lawyer, such as Charles J Schneider PC, can protect you. They have specialized experience and can advise you the best course of action to take regarding your car.