People often wonder how bankruptcy will affect their ability to keep their car. While there can be complications if you are far behind on payments, what happens to your property in bankruptcy will most likely be up to you. It is crucial to work with an experienced attorney from a law firm like Levitt & Slafkes, P.C. so you are informed and able to make the best choices.
The Automatic Stay Prevents Repossession-Temporarily
If you are behind on your car payments, the automatic stay–going into effect immediately after you file–will give you some breathing room from action by the lender. This injunction forces almost all creditors to stop collection activities during your bankruptcy meaning that during that time your car cannot be repossessed unless the lender files a motion to have the stay and it is granted.
Your Car in Chapter 7
If you are filing for Chapter 7, you have several options. If you want to surrender the vehicle, that is your most simple option. In this case, you return the car to the creditor, and ask for the debt to be discharged in your bankruptcy.
If you are interested in keeping the car, you have a couple of different choices. If you want to continue your financing as before (or perhaps even attempt to re-negotiate better terms), the auto lender will most likely want you to sign a reaffirmation agreement. Here, you are ‘reaffirming’ your obligation to the debt. The key is to be sure that the vehicle is worth signing on another loan for, and that you can indeed make the payments.
You can also choose redemption. Here, you pay fair market value for your vehicle, in a lump sum, to the lender. This offers you the chance to keep your car, have it paid off-and for less than what you would have paid originally. Coming up with thousands of dollars in a short amount of time is often difficult for many who are filing for bankruptcy, however. The creditor must also agree to the new price.
If you want to walk away from the car when you file Chapter 7 bankruptcy, you can do so and not owe the debt.
Contact Us Regarding All Your Bankruptcy Questions
The experienced attorneys at Levitt & Slafkes, P.C. can answer all your questions regarding bankruptcy issues. Contact us today so one of our attorneys can evaluate your case and discuss the best options available to you. We are here to help!