A Quick Guide To Debt Relief Through Filing Bankruptcy When You Want To Keep Your Vehicle

If you have accrued extensive debt and have been unable to maintain payments or you are sure that you will not be able to make the appropriate payments in the future, it is a good idea to consider declaring Chapter 7 Bankruptcy. Unfortunately, if you file bankruptcy, you could easily be expected to give up your vehicle in order for its value to be sold to offset your debt. Conversely, you could also find that the lender will demand the vehicle back because you will no longer be making the necessary payments. If you would like to keep your vehicle and believe that the best way to resolve your financial problems is by filing an application for bankruptcy, it will be very important to be aware of the following information.

Chapter 7 Says You Can Keep Your Car...But There's A Catch

You are probably already aware that a Chapter 7 Bankruptcy can allow you to eliminate part or all of your debt. However, as part of doing so, you will often be required to relinquish your car in order to provide payment for some of your debts. Fortunately, there may be exclusions to that, depending on your personal situation and the state in which you live. There are exemptions that allow debtors to maintain ownership of vehicles when filing Chapter 7 bankruptcies, but the value and status of your vehicle will significantly impact your options.

The Equity You Have In Your Vehicle Is Crucial To Know

For example, if you still owe money on the car you may find that the lender will demand it back soon after payments diminish or stop and declaring Chapter 7 will not stop that. If your vehicle is paid for, the trustee who is helping you with your bankruptcy paperwork will need to determine its equity. That is usually be done by establishing how much it would cost you to replace the car if it were stolen or destroyed.

Each state has their own guidelines as to the amount of equity your vehicle can have without needing to be sold. As a result, you should plan to speak with your bankruptcy attorney to determine what the maximum amount of equity you can have in a vehicle in your state is. If it exceeds that amount, it will typically need to be sold as an asset and if it is under that amount, you will often be able to keep it.

In conclusion, obtaining debt relief through filing bankruptcy is the right choice for many Americans each year. However, you may find that keeping your vehicle is not always easy after filing an application for bankruptcy. If you need to keep your car and also need a fresh financial start, it is a good idea to consider the information provided above. Contact a lawyer, such as Curtis A. Anderson, Attorney At Law, for more information.   

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