If I File for Bankruptcy Can I Keep My Car?

Last year, about 800,000 people filed for bankruptcy in federal courts, says the National Bankruptcy Forum. If you’re in the same boat, it’s a smart policy to know as much as you can before you file for bankruptcy. One question that’s likely on your mind is this: if I file for bankruptcy can I keep my car?

You can. However, you’ll need to know a few things before you can move forward with a decision. That’s why consulting with bankruptcy lawyers like us is a must. If you’re entirely sold on the idea of keeping your car, here’s what you can do:

● Reaffirmation agreement

If you’ve filed a Chapter 7 bankruptcy, we recommend starting with a reaffirmation agreement with the car lender. This is a good option to consider if there’s no equity in the car. The agreement basically means that you’re taking on the debt that comes with the car loan, even after you’ve gained a bankruptcy discharge. However, if you default on your payments, the lender could sue you for a deficiency judgment and repossess the vehicle.

● Motion to redeem

Still under bankruptcy 7, this option involves you buying your car right from the lender. The amount of the car should be equal to its market value when you filed for bankruptcy. This is an ideal fix if the car’s value is lower than the amount you owe on the car’s payments. However, this only works if the car is for personal use. Also, you can’t pay on an installment basis. You’ll need to come up with enough funds for a lump sum payment, says The Balance. If you want to go with this option, you’ll benefit from insightful advice and competent help from a bankruptcy lawyer.

● Claiming exceptions

If you own your car straight out and there aren’t any liens or debts to pay for, there’s still the matter of keeping it safe from the bankruptcy trustee. You can talk to a bankruptcy lawyer in detail about claiming exemptions on the Schedule C to protect the car and claim it as exempt. If you don’t, the trustee could sell off your car and the proceeds from the sale will go towards paying for your debt. If this isn’t agreeable with you, then ask help from a bankruptcy lawyer to know if those exemptions apply in your case.

● Catch up with payments

You can still keep your car under a chapter 13 bankruptcy. Already skipped a few payments? Use this option to catch up. Filing for one eliminates a lot of your debt and can free up your funds enough so you can make those payments.

Finding a way to keep your car after filing for bankruptcy can be the right financial move for you. Ask us for sound advice. Get in touch with us by calling our offices in Fort Lauderdale or in West Palm Beach. With a free initial consultation and an office that’s open 7 days a week, we can provide you with the help you need.