Will I Lose My Vehicle If I File Chapter 7 Bankruptcy?
Many people are under the false impression that they must give up all of their belongings if they file a Chapter 7 debt elimination program. This is simply not the case and in fact in some circumstances, the Chapter 7 bankruptcy filing will actually help you to improve your standing with your creditors. This could be the case with vehicles under a Chapter 7 filing – you have several opportunities to re-negotiate the car loan.
What is Chapter 7 Bankruptcy?
Chapter 7 is a court-authorized debt elimination program that provides full debt relief from your unsecured debts such as:
In addition to eliminating debt, the program may offer you the opportunity to renegotiate or lower certain debts, like your vehicle.
Chapter 7 Bankruptcy and Reaffirmation Agreements
Once the bankruptcy paperwork is filed, we will be contacted by the car lender or creditor. You have the option to surrender the car at no financial penalty or you can keep the vehicle and sign a “re-affirmation agreement”. This states that you will continue to make regular payments on the debt. This is a proposal that is drafted by your lender and sometimes the terms they propose are better than your current contract, such as:
- Reduced Interest Rate;
- Extended terms for the loan;
- Reduction in the value of the vehicle for the balance of the contract.
Chapter 7 Bankruptcy and 722 Redemption Program
Another option is through 722 Redemption. This program allows you to keep your car by paying the lesser of the amount owed or the fair market value to the creditor In effect, you are buying the vehicle for its current value using third party financing. This is your right under the law.
If we aren’t able to improve upon the terms of the vehicle loan, most of the time the mere fact that you are eliminating other debts that may be impeding your monthly outflow will make your budget more manageable.
The purpose of the Chapter 7 is to:
- Provide court protection from your creditors;
- Eliminate debt that you do not have the ability to pay back and;
- Offer a fresh financial start to begin rebuilding your credit .
Call the Michigan Bankruptcy Experts
At Acclaim Legal Services, we specialize in debt elimination and debt consolidation through the Chapter 7 and Chapter 13 programs. We have an excellent reputation and ability to negotiate with creditors to ensure that you get the best possible outcome.
Call us today at 866-261-8282 to discuss your debt resolution options. With over 50 years of combined legal experience in debt resolution, you can trust us to help you find your path to financial freedom.
We offer free in-office or phone consultations to review your personal circumstances, analyze your situation and advise you on the best course of action. We specialize in bankruptcy law, debt resolution, foreclosure prevention and credit repair. We have offices in Detroit, Southfield, Dearborn, Flint, Ann Arbor and Warren, Michigan. Please call us toll free at 866-261-8282 or click here to schedule a consultation right now.