Can I Keep My Car in a Chapter 7 Bankruptcy?

As an Asheville bankruptcy lawyer, I speak with people everyday who worry they will lose their belongings if they eliminate their credit card and medical debts with a bankruptcy case.

In over 90 percent of the cases filed, Chapter 7 bankruptcy clients keep all of their property.

For cars, bankruptcy clients have four different options.  First, they can choose to ‘reaffirm’ the debt.  This means the same terms will apply to the car loan as before they filed a case (occasionally we can negotiate better terms).  Second, bankruptcy clients can ‘redeem.’  This option is basically a refinance of a car loan for the amount the car is worth, not the amount still owed.  This works great for underwater cars.  Third, bankruptcy clients can ‘retain and pay’ which means they just keep paying on their car loans without reaffirming the debt.  While the lender must agree for this choice to work, almost all car loan companies do (Ford Motor Credit and Credit Unions generally do not).  Lastly, a bankruptcy client can surrender their car and eliminate their liability on the loan.

For more bankruptcy information about your car or otherwise, please contact me for a free, initial consultation.

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