If you are stuck in debt, you should consider filing for personal bankruptcy, which helps clear away your debts. Personal bankruptcy includes two types, Chapter 7 and Chapter 13.
While Chapter 7 means liquidating some of your assets if you have any that exceed the limits on value, Chapter 13 implies repayment of debts from your future income. If you are considering filing for bankruptcy, you must be concerned about what happens to your vehicle through the bankruptcy process. The fate of your car ultimately depends upon the type of bankruptcy filed by you and the equity present in the vehicle.
Can you keep your vehicle after filing for bankruptcy?
To save your vehicle through the bankruptcy process, you need to be aware of several factors that could have a say on it. The car is always regarded as an asset and is of utility value. The trustee and creditors can investigate this aspect to determine how much of their debt will be paid. The vehicle may also be counted under an exemption, thus safeguarding it from repossession if the lender agrees to accept future payments from the debtor. The factors that help to retain the vehicle are varied, and they are as follows:
- The type of bankruptcy being filed
- The value or cost of the vehicle
- The nature of exemptions that are applied to a place where one lives
What happens to your vehicle in a Chapter 7 bankruptcy?
In chapter 7 bankruptcy car creditors often pressure a debtor to sign a new contract wherein the debtor will be personally liable should future payments fall delinquent. Creditors often threaten to take the car even while the debtor is current on the payments. This creates a dilemma for debtors who wish to maintain possession of their vehicles, especially when they need the car for work transportation.
What happens to your car in Chapter 13 bankruptcy?
Chapter 13 bankruptcy is somewhat different from Chapter 7. It does not liquidate non-exempt assets for repayment to creditors. You will instead enter a debt repayment plan. Your property may be protected from repossession by way of Chapter 13 bankruptcy. A reorganization case will ensure that your finances are reorganized to enable you to begin the process of repayment. If you own a vehicle outright, you will be able to retain or keep it.
If you would like more information about how bankruptcy can help you, contact an Elk Grove bankruptcy attorney.