Chapter 7 bankruptcy helps you eliminate some of the debt you have by surrendering certain property in order to make a clean financial start once again. However, what happens if you want to keep some assets after your bankruptcy case is closed? The experienced bankruptcy attorney in San Diego answers one of the most pressing questions debtors often ask: Do I have to give up my car in Chapter 7 bankruptcy?
If I file bankruptcy, what happens to my car?
If you are struggling to understand how filing Chapter 7 affects your car ownership, here is what you should know. It primarily depends on whether your car is already paid off or your car loan is one of the debts included in your bankruptcy.
If the car you own has been paid off, your bankruptcy trustee may decide to sell it as non-exempt property in order to collect proceeds to pay your unsecured creditors. If the applicable California bankruptcy motor vehicle exemption is equal to or greater than the replacement value of your car, you will most likely be allowed to keep your car. On the other hand, if the applicable exemption is much less than the value of your car, the trustee will most probably proceed with selling it.
Can I file Chapter 7 and still keep my car?
If you want to keep your vehicle after filing Chapter 7, you have several options available.
- If your paid-off car is about to be sold as non-exempt property, you can try to use another exemption, such as a wildcard exemption, in order to avoid surrendering your vehicle to be able to pay some of your creditors.
- If your car is still under a loan and you want to keep it after declaring bankruptcy, you should consider one of the following options:
- Retain-and-pay option allows you to get a discharge of your car loan, keeping you safe from the creditors who would otherwise be free to come after you personally for any unpaid amount of the debt. In other words, instead of giving up your car, you get to keep it and continue making the payments for it.
- A reaffirmation is an option that some lenders demand in order to keep you from discharging your personal loan obligation. Reaffirmation is a legal process in which you reestablish your promise to pay the loan, and, unfortunately, you remain personally liable for it.
A retain-and-pay option is a lot safer and more common choice, so make sure to consult your bankruptcy attorney before making any final decision.
How long can I keep my car after filing Chapter 7?
There is no legal requirement for a lender in terms of a deadline when they must pick up the car after your debts are discharged in Chapter 7. In case you haven’t been able to keep your car with wildcard exemption, retain-and-pay or reaffirmation options, your bankruptcy trustee will come to collect and sell it to be able to repay some of your debts. To get precise information and timeline concerning your car repossession, contact an experienced, reliable bankruptcy lawyer in your area.
Keep your San Diego property safe: Contact the professionals
Whether your questions concern keeping your vehicle, handling real estate after bankruptcy, and improving your credit score, or you are wondering about bankruptcy essentials, a seasoned bankruptcy attorney in San Diego is a professional to look for. With Chang & Diamond, APC, all your questions will be answered and the expertise we bring to the table will help you reach your financial goals timely and safely.Schedule your first consultation and take some time to prepare for what lies ahead. Take your family to Balboa Park and let your mind rest while our capable attorneys get acquainted with your case. With our help, your future will be safe once again.