Can I File Bankruptcy and Keep My House and Car? Survey Results

Table of Content

• Should You Take Out a Car Loan after Bankruptcy?
• If You Fully Own The Caryou Lose It In Bankruptcy If Its Worth More Than A Certain Amount
• Keeping the Car Outside of Bankruptcy
• Bankruptcy Planning
• Keeping Your Car, Chapter 7 vs. Chapter 13
• Discuss Your Bankruptcy Alternatives To Keeping Your Home
• Downsides To Keeping Your House When Filing For Bankruptcy

Your car will be protected in Chapter 7 bankruptcy filing if its equity is equal to or less than $6,000. Similarly, with a home, if you owe $7,000 on a house that is currently worth $16,000, you have an equity value of $9,000. For instance, if you have a car worth $8,000 at current market value, but you owe $3,000 on it, you have an equity value of $5,000. Chapter 7 filers can maintain their property in cases where the amount of the property equity is either equal to or less than the state exemption amount. Equity in your property is the difference between the current value of the property and how much you owe on it. Read more about the specifics on Virginia state exemptions for motor vehicles and residential property based on each chapter.

This means that $6,000 in equity is protected from resale by an appointed bankruptcy trustee. You’re given the freedom to continue making car payments even outside the loan terms of your Chapter 13 repayment plan. To keep your car, you need to continue paying up your loan even after filing for bankruptcy. You need to pay effectively depending on whether you have filed for chapter 7 or chapter 13. Bankruptcy is a way to get a fresh financial start, which may or may not result in the loss of your home equity.

Should You Take Out a Car Loan after Bankruptcy?

With a Ch 13 bankruptcy, your debt is restructured and you have the opportunity to catch up on your bills, keep your home, and keep your car. Maureen Milliken has been writing about finance, banking, investment, entrepreneurship, real estate and other related topics for more than 30 years. She also is is the author of three mystery novels and two nonfiction books. That said, there are some financial downsides to hanging on to your house through a bankruptcy proceeding.

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. You will have the opportunity to get caught up on your car loan if you qualify for a repayment plan. You'll likely lose your car in Chapter 7 if you can't protect all of the vehicle's equity.

If You Fully Own The Caryou Lose It In Bankruptcy If Its Worth More Than A Certain Amount

If you cannot seem to file for bankruptcy without some assistance, you can either consult with a lawyer, hire a service to handle it for you, or get help from DoNotPay. If you make mistakes with your bankruptcy filing by leaving information off or doing things that you should not, the bankruptcy courts will deny your application. The bank files your signed reaffirmation agreement with the courts. Chapter 7 BankruptcyPersonal Ch 7 bankruptcyis an opportunity to have your debt discharged so that you can get a fresh start on your life. You can exempt all your car equity and don't have a car payment. Read through each situation to determine the likelihood of keeping your car.

Because most car loans involve thousands of dollars, banks minimize risk by requiring the buyer to agree to put up the vehicle as collateral. The additional requirement creates a lien on the car that lets the lender repossess the car if the borrower “defaults” by failing to pay. Bankruptcy works by breaking the contract requiring you to repay the lender for the car loan. You can file for bankruptcy, give the car back to the lender, and not pay anything further on the car loan.

Keeping the Car Outside of Bankruptcy

Although you would get a payment from the trustee, you would lose your vehicle. Contact your car lender if you wish to pursue a reaffirmation agreement. It must be approved by the bankruptcy court, and they generally won't approve it if the lender does not reduce the interest rate or principal balance of the loan.

Those involve going back to court and explaining why you need one. Through it all, you have to keep current on your mortgage payments, as well as all the other payments agreed to in the plan. Being up to date on your car payments before you file for bankruptcy makes it much more likely youll keep your car when you file for either Chapter 7 or Chapter 13.

But if you have a lot of equity value, the court may determine you can “afford” to repay more of your debt. First, the court subtracts your mortgage and homestead exemption from the value of your home. Then, the court adds that remaining equity value into your “available” funds that can be used to repay your debts. Exempted property are the assets that you’re allowed to keep. Each state and the federal government sets its own exemption limits. Instead of clearing your debts, you enter a repayment plan, usually for 3-5 years.

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Simply put, bankruptcy exemptions tell you how much of your property you get to keep. Bankruptcy can be a scary process when you do not know what property is at stake. When people file, one of their fears is that they will lose essential property such as their car or their house. The Martindale-Hubbell Peer Review Ratings process is the gold standard due to its objectivity and comprehensiveness. Lawyers solicited for peer reviews include both those selected by the attorney being reviewed and lawyers independently selected by Martindale-Hubbell. All reviewers are verified as attorneys through Martindale-Hubbell’s extensive attorney database.

However, if you do not currently have a car loan, the equity is the full fair market value. It is critical to discuss the value of your vehicle with our seasoned bankruptcy attorney before filing. After deducting the $17,500 balance on his bank loan, his equity equals $9,500.

Bankruptcy law has exemptions that allow them to keep their car. People who file for Chapter 7 bankruptcy, the most popular for individuals, don’t have many assets and keep most of what they own, including their car. Consequently, victims of bankruptcy can only keep their house and car if they can still afford to make the monthly payments on the loans. Its tough to keep to a payment plan over three to five years, even though modifications are allowed.

Very few lenders will do this, though, as they would prefer a constant stream of payments versus the risk of a low price for an auctioned repossessed vehicle. Your first option in a Chapter 7 case is to enter into a reaffirmation agreement with your car lender. If you own your car free and clear, this option does not apply to you. A reaffirmation agreement means that you contract with the lender to take the car loan out of the bankruptcy altogether. It won't be subject to the bankruptcy discharge, and in exchange for keeping the car, you have to continue making the payments.