Can I File Bankruptcy and Keep my Car?
Filing a Chapter 7 or Chapter 13 bankruptcy does not mean you will loose your car.Schedule a Consultation
You may be thinking, "Can I file bankruptcy and keep my car?" The answer to this question is usually based on your intentions during bankruptcy. If you want to keep your vehicle, you can protect it and modify or improve your payment terms through a Chapter 13 bankruptcy.
If you are filing a Chapter 7 bankruptcy due to bills you can no longer afford, you can still keep your vehicle provided you are current on your payments. If you can no longer afford the vehicle or no longer wish to keep it, you can surrender it through either program for car equity and legally resolve the debt through the bankruptcy process.
Keeping Your Car With a Chapter 13 Bankruptcy
A Chapter 13 bankruptcy is a debt consolidation program designed to help protect your property and re-establish payments with your creditors if you have fallen behind. The program offers many unique benefits that can actually help you keep your vehicle, improve your payment terms and re-establish your credit.
The Chapter 13 plan prioritizes payments to secured creditors, such as your car loan. Payments to general unsecured debts are deferred until a later time. Most often, general unsecured debts are significantly reduced or eliminated under the program (i.e. credit card and medical bills). The program is designed to create a balanced budget based on your income and expenses. This means you can file bankruptcy and keep your car!
If you have gotten behind on your vehicle payments, the Chapter 13 plan can bring your account current through the debt consolidation process. The Chapter 13 bankruptcy will protect your car from a repossession. If your vehicle has been repossessed, a Chapter 13 will help you to get your car back provided it has not been sold at auction.
Improving Your Payment Terms
In short, the Chapter 13 program is a way of “refinancing” your vehicle as well as consolidating other debts. There are several ways that the Chapter 13 plan can improve your payment terms on your vehicle loan.
- Reduce the interest rate: If you are paying a high interest rate on your car loan, we can reduce the interest rate to current market rates.
- Extend the payment terms: We can alter the payment terms to extend or shorten the timeframe left to pay-off the loan. By extending the loan (over a 3 – 5-year period), it will lower the required monthly payments.
- Reduce the principal amount owed: If you have owned the vehicle for over 2.5 years, we can actually reduce what you owe on the contract. You will only be required to pay the current fair market value of the vehicle, not the full balance on the contract.
Will I Lose My Car in A Chapter 7 Bankruptcy?
If you are current on the vehicle payments, you will not lose your vehicle if you file for Chapter 7. Your creditor will ask you to re-affirm the debt you owe and ask that you continue making payments.
The purpose of the Chapter 7 is to press the “reboot” button with your budget and finances. You have the opportunity to legally eliminate unsecured debt that may be compromising your budget and making it difficult to maintain your car payments. Most often our clients find it is easier to maintain with vehicle after a Chapter 7 bankruptcy because they have a reduced debt load.
You also have the opportunity to refinance your vehicle during the Chapter 7 though a “722 redemption” program. This program refinances your vehicle to the fair market value of the vehicle with a new lender.
Improving Your Finances
Our goal is simply to help you to improve your finances and find lasting debt resolution and financial peace of mind. We offer a free comprehensive consultation to carefully review your budget and outstanding debts before we discuss your options of resolution. Call us today at 866-261-8282 to speak with a licensed attorney about your vehicle ownership and other debt resolution questions. We have convenient office locations in Detroit, Ann Arbor, Flint, Warren, Southfield and Dearborn Michigan.
Thank you for all of your help whenever I called or emailed you regarding my bankruptcy case. You were always helpful and quick to respond on helping me. I truly appreciate the awesome legal service that team at Acclaim Legal Services provided.
The team we worked with at Acclaim has been very helpful. They are very responsive and are always ready to help. There has been no disruption and my attorney is always very straight forward with his responses. My questions and concerns are always answered via…
Greetings Julie! This is to let you know about our experience with Acclaim Legal Services regarding our Chapter 13 Bankruptcy case. Chris made the journey easy because of his prompt replies to our emails and phone calls. He always kept us abreast of what was…
I would like to take a few minutes to say thanks to your entire staff. In the past 51/2 years I have come into contact with a lot of them! Chris and Cindy have been very patient with my questions, e-mails and phone calls.
Acclaim Legal Services has given…