Filing for bankruptcy can be a difficult decision, and it is important to understand the implications of this process. Bankruptcy law in the United States allows individuals to keep certain assets, including their car, when filing for bankruptcy. However, the specifics of this process depend on the type of bankruptcy you file and the state in which you live. When filing for bankruptcy, it is important to understand the different types of bankruptcy available.
The two most common types are Chapter 7 and Chapter 13.Chapter 7 bankruptcy is a liquidation bankruptcy, which means that some of your assets may be sold to pay off creditors. In contrast, Chapter 13 bankruptcy is a reorganization bankruptcy, which allows you to keep your assets while paying off creditors over a period of time. The type of bankruptcy you file will determine whether or not you can keep your car. In Chapter 7 bankruptcy, you may be able to keep your car if it is covered by an exemption.
Exemptions are laws that protect certain assets from being sold to pay off creditors. Each state has its own set of exemptions, so it is important to check with your state's laws to see what is covered. If your car is not covered by an exemption, you may be able to keep it if you can pay off the loan in full or enter into a reaffirmation agreement with the lender. In Chapter 13 bankruptcy, you are allowed to keep all of your assets, including your car.
However, you must still make payments on any loans associated with the car. The payments must be made through the bankruptcy plan and must be paid in full by the end of the plan period. It is important to note that if you are behind on payments for your car loan when you file for bankruptcy, the lender may repossess the vehicle even if you are allowed to keep it under the law. To avoid this, it is important to stay current on payments before and during the bankruptcy process.
If you are considering filing for bankruptcy and want to keep your car, it is important to understand how the process works and what options are available to you. An experienced bankruptcy attorney can help guide you through the process and ensure that your rights are protected.