Are you interested in filing Chapter 7 bankruptcy? In this case, you may be wondering how it will impact your vehicle. Are you interested in keeping your car when filing Bankruptcy? If you are not making payments at this time, you will either need to become current on the vehicle or pay in the redemption amount which depends on the circumstances of the case.
During your bankruptcy case, you must decide if you are going to continue to make payments or surrender your vehicle. It is your responsibility to make a final decision, letting the bankruptcy court know of your intentions through a Statement of Intention (SOI) form.
Can you Walk Away?
If you decide to walk away from your car when filing Chapter 7 bankruptcy, you will list your lender on your Statement of Intention along with the state in which you will surrender the vehicle. In short, this means you will not be making any further payments on the vehicle. In the end, this clears you of any liability on the debt.
Note: in the event that you are leasing the vehicle, you can reject the lease on your Bankruptcy and indicate that you do not intend to continue payments on the lease.
Keeping your Vehicle
If you want to keep a vehicle that you are currently paying for, you must continue to make payments in full and on time. That being said, consider your options:
- Pay the lender one lump sum to purchase the vehicle at its “redemption” or current value
- Enter a new contract, through a reaffirmation agreement, which allows you to keep your vehicle
Tip: if you opt for a reaffirmation agreement, you are able to negotiate with the lender.
When you file Chapter 7 bankruptcy, there is going to be a lot on your mind. At some point, you must make a decision as to what you will do with your car. Some people surrender their vehicle while others want to keep it. Sometimes you may believe it is better to keep the vehicle while in other cases you may be much better off surrendering the vehicle and getting a different car. Consult with your experienced bankruptcy attorney before making a final decision.
There is also Chapter 13 Bankruptcy which in some cases is a wonderful way of keeping your car when filing bankruptcy. You are given time to get caught up or in some cases you can pay off the car through the Bankruptcy. Your bankruptcy lawyer can advise you on the right move for you to make when filing Bankruptcy.