Consequences of Bankruptcy
When you have chosen to file for bankruptcy, your whole life can change. If you are struggling with debt, you may be able to get to a point where you are able to pay off your debts through a repayment plan or through liquidating your assets. Understandably, you probably want to know what will happen to some of the important assets in your life like your car. While you may be willing to part with some things if it means repaying your debts, you need a car to go to school, work, and even the grocery store. If you are filing for bankruptcy and want to know what can happen to your car, call a skilled lawyer. He or she will be there to represent you when you are going through the bankruptcy process.
What factors play into whether you can keep your car or not?
There are a few factors that will determine if you will be able to keep your car during the bankruptcy process.
- Whether you outright own your car or are still financing it
- How much the car costs
- What type of bankruptcy you are filing for
These are a few factors that will impact whether you will need to give your car up or if you can keep it.
Filing for Chapter 7 Bankruptcy
Also known as “liquidation bankruptcy,” this type of bankruptcy helps clear your debts by selling your assets. Depending on the state you live in, there will be different rules about the types of assets that the bank trustee can use for the bankruptcy process. If you have been paying off your car payments and have a certain amount of equity in your car, speak with your bankruptcy lawyer about what your state’s exemptions are. There will typically be an exemption limit and if you have less than the limit, you should be able to keep your car.
On the other hand, your trustee may sell the car and use that money to pay back some of your creditors or if you are behind on your car payments then the lender may outright repossess your car.
When you are dealing with bankruptcy and trying to keep your car, the situation can become quite difficult. One of the best things you can do is speak openly with your bankruptcy attorney about your concerns and needs and see what you can do to keep your vehicle. For more information on the bankruptcy process contact a bankruptcy lawyer.