Though you are filing bankruptcy and it is a common thing to believe that you are losing everything. Surely your creditors will never consider your condition and want to get their dues in full. But the fact is different because claiming bankruptcy does not mean that you are selling out everything in your hand. There are ways to save your personal property that is exempted under the code of bankruptcy.
In the case of any complicacy of this issue that you don’t know, you should get help from a bankruptcy attorney. An attorney deals with this issue even if you don’t know from where to start. Additionally, there are ways on how to file chapter 7 with no money in case you need a low income bankruptcies lawyers. Simply we are going to let you know how you can understand your bankruptcy case. This may be either chapter 7 or chapter 13 and keep your car as your own. is given below with step by step approach.
Ways To Keep Your Car In Chapter 7 Bankruptcy
In chapter 7, all kinds of your debts can be discharged or eliminated which in turn you must avoid your nonexempt property and the bankruptcy trustee collects your property and used car, sell at the market price and pay the unsecured creditors. In the case of keeping your car, there are two most important questions to you and they are-
- Is your equity exempt?
- Do you lag behind the payment?
Is Your Car Equity Exempt?
Car equity is like your car’s current value is $15,000 and you owe $5000 as a loan to the other source. So the car’s equity value is $10,000. Now the question is whether your car equity value is exempt or free from any influence by the creditors.
There are different rules and regulations on the decision of the court in relation to car exemption. It depends on bankruptcy filers to make sure some property is up to the dollar limit. This limit may vary according to the nature of the bankruptcy case and this can range from $500 to several thousand dollars.
In the case of your car’s equity value is more than car’s exemption amount, then the trustee may take this car and sell it to pay your unsecured creditors and keep the rest of the amount as the exempt amount for you.
Do You Lag Behind The Payment?
In bankruptcy cases, the creditors are the person to whom you owe and need to make payment to them. For exempted property, you are relieved from payment. But you are not current to pay according to the payment plan, surely you are losing your car even if your car was exempt property. In this situation, it is hard to get back on track unless you don’t have any contract with your lender and other necessary payment plans. So there are some important options which may be fixed up.
Redeeming The Property
For your family, important personal purpose, or household need, your car is strongly required to make sure your life is easily manageable. This is backed by the court as every people has rights and benefits to lead a life like common people. What happened in terms of bankruptcy is not an issue indeed. For example, a disabled person may not use public transport and he needs an easy means of travel like a car.
In chapter 7, there is no binding to buy a car and you can easily buy a car outright from any lender at the market price when you are going to file bankruptcy. This won’t affect your car. This can be a good way to go in case your car value is lower than the loan amount value.
The court has rules and regulations to keep your car in this process. Firstly you need to file a motion to redeem the bankruptcy court and submit related documents about the price, your family condition, and information about your lenders. In this way, you can redeem a car after making the current replacement amount of the car to your lender. This is possible when the car is exempt and the trustee has made the decision not to sell the car as it needs lump-sum payment.
Reaffirmation Agreement
A reaffirmation agreement is a written contract between creditors and debtors about the payment plan. It makes sure all parts of the debt or obligation keep in full force and effect even if bankruptcy status is going on. This is the best way to go this reaffirmation agreement to keep your car because you can alter the terms and conditions of the payment plan in the agreement. Both of you need to agree to proceed with the agreement process.
The reaffirmation agreement works best when you want to get your car loan out of the bankruptcy case. The important issue is to be noted here and it is important to continue payments to your lenders. In case you default on the loan, the lender may repossess the car and sue for deficiency.
So if you want to go reaffirmation agreement, you should contact your lender. The court will grant this agreement on the basis of consent from both sides.
Keeping Car In The Case Of Chapter 13
It is easy to keep the car as your own when the car has a high amount of equity in the event of chapter 13. Chapter 13 is considered to be taking time to pay your debts according to the bankruptcy code. You may have enough property to pay your debts and make a plan of 3 or 5 years repayment plan. But you need to be current on your car payments. Another issue is to be considered and it is about the interest rate. When you may owe more than car value and the interest rate may be higher in this case, you have the option to change the payment structure as you can only pay the car value instead of interest.
Final Thought
Whatever condition you face like bankruptcy, it does not mean that you have to lose everything or the trustee will sell your all property. After filing bankruptcy, you have a really good income source which is enough to keep your car because you can have a payment structure and you can also change your payment terms according to your plan.