One of the most common questions many people ask when facing the possibility of bankruptcy is: can I keep my car? A car is necessary for most people to keep their job and remain independent. Some people also have an emotional attachment to their vehicle and would rather avoid bankruptcy than lose their car or truck.
As the bills pile up, however, and they are faced with repossession and bankruptcy, they must make a difficult decision. Here are a few things to keep in mind:
Filing for bankruptcy puts an automatic stop on repossessions. If your car is in danger of being repossessed, you will be able to stop those proceedings by filing bankruptcy.
All assets and debt are included in Chapter 7 bankruptcy. In liquidation bankruptcy, all unsecured debt will be discharged. In most cases, this includes the car loan or lease. There are exemptions available to help you keep the car.
You may be able to reaffirm the car loan. If you file for Chapter 7, your car loan will be included, but you will likely have the option to reaffirm the loan, keeping the debt on it and keeping the car. You will still have to pay the loan back in full, without options to get rid of the loan, though. If you are still unable to pay that debt, it will be repossessed.
Under Chapter 13 bankruptcy, you keep the debt, but it is restructured into a more manageable repayment plan. You will keep the debt - and the car - but you will have the opportunity to pay it back in an easier manner.
Bankruptcy is not intended to take away all of your possession. There are strategies available to help you keep your vehicle (and your job, as a result). A skilled bankruptcy attorney can walk you through all available options. At Gipson, Norman & Root, we create customized bankruptcy plans that meet the specific needs of our clients and create a manageable way of filing bankruptcy and eliminating debt. For more information, click here.