Keeping Your Car Chapter 7 Vs Chapter 13
People who file for bankruptcy generally have cars that are of less value than the average consumer, but they also have more of their wealth tied up in their car. The CBP car bankruptcy study points out that makes sense. People come to bankruptcy court with their wealth depleted, and the data bear out the intuition that people will hold onto their means of transportation if they can, the study says.
The numbers also show that Chapter 13 bankruptcy is a better bet for keeping a car than Chapter 7.
Chapter 7 bankruptcy involves liquidating assets to pay off unsecured debt, and even with the car exemption, it takes a lot of number crunching to keep your car.
Chapter 13 bankruptcy, on the other hand, creates a repayment plan that takes into account your income and assets, with an eye toward keeping what you own. Unsecured debt is discharged if the plan is successfully completed. Its an especially good option if you have a lot of equity in a car, though that equity will be considered part of the wealth that is the foundation of your payment plan. If youre behind on payments, the plan will include catching up.
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Go To Court To File Your Bankruptcy Forms
Once you enter the doors of your local courthouse, you will be greeted by security guards, who will ask you to pass through a metal detector. Once you pass security, you will go to the clerkâs office and tell the clerk that youâre there to file for bankruptcy. They will take your bankruptcy forms and your filing fee .
Do not submit your bank statements or tax returns to the court. These documents go to the trustee after the case is filed. Check out Step 7 below for more info on that.
While you wait, the clerk will process your case by scanning your forms and uploading them to the courtâs online filing system. This usually takes no more than 15 minutes.
Once done, the clerk will call you back to the front desk and give you:
Your bankruptcy case number
The name of your bankruptcy trustee
The date, time, and location of your meeting with your trustee
At this point, your case has been filed! Congrats! The automatic stay now protects you from all debt collectors. But youâre not home yet – there are other steps you need to complete to get a fresh start under Chapter 7 of the Bankruptcy Code!
Will You Be Able To Afford To Make The Loan Payments After The Bankruptcy
When you file your reaffirmation agreement with the court, you will have to determine whether the assumption of the loan creates a presumption of undue hardship. This is done by subtracting your monthly expenses including the loan payments from your monthly income.
If you do not have enough monthly income to pay for your monthly expenses , then the court will presume that reaffirmation of the loan creates a hardship upon you. If this is the case, you will have to appear in court and explain to the judge how you expect to be able to make monthly loan payments after bankruptcy. The judge will then determine whether to allow the reaffirmation agreement.
If there is no presumption of undue hardship or if the judge allows the reaffirmation agreement despite the presumption of undue hardship, you will be able to keep the property after your bankruptcy.
About the author
Kevin OâFlaherty is a graduate of the University of Iowa and Chicago-Kent College of Law. He has experience in litigation, estate planning, bankruptcy, real estate, and comprehensive business representation.
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What Happens To My Car If I File Bankruptcy
Very few people who declare bankruptcy in Canada lose their vehicle. You need your car to get to work, so losing your vehicle is not an option. All provinces have laws that exempt one car or truck worth up to a certain dollar limit from seizure by the trustee. To find what happens to your car after you file bankruptcy, we look at two key questions:
The first question that you will be asked is what is your car worth? To determine this youll need to have the vehicle appraised. Most trustees will accept an independent value of opinion that is, the opinion of someone who is qualified to sell cars or value cars, that is not related to you or a friend, that is willing to write out a letter indicating what they believe the fair market value of your car is. Fair market value is the amount that someone would pay for your car.
The second question will be is your car financed or do you have clear title to your car? Clear title means that there are no liens or other claims to your car. A lien is the technical term for pledging your car as security for a debt. In other words, is your car financed, leased or has another creditor placed a secured charged against your vehicle.
If you file bankruptcy, there are options that can allow you to keep your vehicle no matter its value. You can also choose to keep, or hand back, a leased or financed vehicle depending on what makes the most sense for you financially.
Can I Keep My Car If I File For Bankruptcy
We find a common question people ask is Can I keep my car if I file for bankruptcy? They want to know what happens to your vehicle if you declare bankruptcy. Will you lose your car in the process or will the bankruptcy trustee take it? What can you expect? The answer basically depends on two things: 1) is there a loan on the car, and 2) if there is not a loan, how much is the car worth?
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Keeping A Car You Own Free And Clear
If you own your car free and clear, the next question you have to answer is âhow much is my car worth?â The answer – the carâs fair market value – determines whether you risk losing the car in a bankruptcy.
How much is your car worth?
If you sold your car today, as is, whatâs the most someone would pay you for it? Thatâs the value that matters. It doesnât matter how much the car cost when you bought itâ¦ thatâs old news. If youâve had your car for a few years, itâs no longer in the same condition as when you bought it. How much it cost then doesnât tell you how much itâs worth today.
It also doesnât matter how much you ended up paying for it by the time the car loan was finally paid off. That amount includes the interest you paid and depending on the interest rate on your auto loan, that can be quite a bit more than the car was ever worth.
Find out how much you can protect with an exemption
Filing a bankruptcy case is meant to give you a fresh start. Bankruptcy exemptions exist to make sure everyone filing a bankruptcy case can keep their most basic possessions. Depending on the state youâre filing in, and how long youâve been there, you may be able to choose between the federal bankruptcy exemptions and the exemptions granted by your state law.
Getting additional protection by claiming a wildcard exemption
What if my carâs fair market value is greater than the exemption amount?
Chapter 13 bankruptcy can help, too!
How Can I Keep My Car During Bankruptcy
The best method to keep your car during a bankruptcy proceeding depends on whether you own your vehicle outright or you have debt on your vehicle. If you own your vehicle outright or even if you have some debt on your vehicle, you may be able to protect your vehicle under a standard exemption.
If youre behind in your payments, you may be able to reaffirm your vehicle loan or bring a motion to redeem the vehicle. The best course of action depends on the value of your car, the amount that you owe, and what your lender is willing to agree to.
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Keeping Your Vehicle With Chapter 7 Bankruptcy
TO DETERMINE IF CARS, TRUCKS, BOATS, OR MOTORCYCLES are protected in a chapter 7 bankruptcy, a person must consider two separate and distinct issues.
EQUITY CONCERNS allow a person up to $3,675 of equity in any one vehicle. A person can keep as many cars, trucks, or motorcycles that the person owns, as long as none of these vehicles has any equity.
However, if an automobile has equity a person can only protect one such vehicle in a chapter 7 bankruptcy as long as the equity in the item does not exceed the $3,675 allowance. Equity is determined by taking the average book value and subtracting from it any car loans from the property. For instance, if the vehicle is worth $10,000 with an outstanding loan in the amount of $7,000, the vehicle would have $3,000 of equity and could be protected.
PAYMENT PROBLEMS on a car, truck, or motorcycle when filing bankruptcy require you to decide if you want to continue to pay for the vehicle and keep it, or stop paying for the vehicle and surrender it back without being responsible for the debt.
In order to redeem, payment in full of the current value must be made in one payment. This costly transaction can be financed through companies that provide redemption loans to individuals filing for chapter 7 bankruptcy that want to keep their car, truck, or motorcycle.
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Personal Exemptions By Province/territory
Alberta bankruptcy exemptions
In Alberta, property exempt from seizure in bankruptcy is set out in the Civil Enforcement Act and applies to the equity in an asset. Equity is the difference between the value of the asset and how much you owe on the asset.
Example: If you have a car worth $10,000 and you owe $6,000 in car loans, the equity you have in the car is $4,000. In Alberta, the exemption for a car is $5,000. In this case, you have equity of $4,000 and your unsecured creditors cannot take this from you when you file for bankruptcy.
Can I Keep My Leased Car During Bankruptcy
Yes, it is possible to keep a leased car if you file for personal bankruptcy in Canada, but certain conditions will apply.
First, some background. There are two types of creditors: secured and unsecured. Unsecured creditors are included in a bankruptcy once the bankruptcy starts, you are not allowed to pay them. Secured creditors have security registered against one of your assets, such as a car or a house if you dont pay them, they can repossess the asset.
Your leasing company is obviously a secured creditor the car is the asset that they are holding as security if you dont pay them, they can seize the vehicle, whether you are bankrupt or not.
Legally then you can keep a leased vehicle if you go bankrupt, provided you continue making your lease payments, and assuming the leasing company agrees. Most leases contain a clause that says that in the event of insolvency, the leasing company can terminate the lease, and repossess the vehicle. In most cases they wont do that, because they would prefer to continue getting lease payments for the life of the lease, but legally in many cases they can repossess the vehicle.
Therefore if you plan to go bankrupt, it is wise to review your lease agreement, and discuss it with your leasing company, to confirm that they will not take your vehicle if you go bankrupt.
There is, however, another issue to consider, and that is the issue of whether or not you should keep the car.
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How To File Chapter 7 Bankruptcy And Keep Your Car
By | Submitted On March 27, 2009
If you have filed Chapter 7 bankruptcy or plan to file Chapter 7 bankruptcy then a 722 Redemption Loan is something you should be aware of. It allows you to keep the car you have instead of losing it in these difficult times. Even if you owe more money on your automobile then it is currently valued at, a 722 Redemption Loan can make it possible for you to take control of your current financing troubles.
There is a bankruptcy law that benefits Chapter 7 filers, but it is based on their individual case. The Car Redemption law, 11 USC 722 “Redemption” says that a Chapter 7 bankruptcy filer that is upside down on their loan can have the courts force the current lender to release the lien on the vehicle to the filer so they own the car outright.
Sounds great right? Well, the only issue is that the filer has to payout the value of the car in cash to their current lender. Take for example:
Car Value = $4,000 Amount owed to current lender = $10,000
The filer must pay out $6,000 in cash to the current lender to be given the lien to the car. In the extremely rare case that the filer has $6,000 to pay their current lender they can own the car, but this is generally not the case of a Chapter 7 filer.
If you are interested in applying for a car financing then Driver Credit is an option to help you get a fresh start with a replacement car. fresh start car loan
Option 4 Do Nothing Keep Paying
Why sign a document or cough up big money you dont have?
In the old days, you could simply do nothing and continue making payments after your Chapter 7 bankruptcy. The lender got paid, you kept the car or house. It was a classic win-win situation.
Not necessarily so anymore, though. Depending on the type of property, the lender and the specific facts of your case it may not work for you to keep making payments and hope to keep the property.
You and I will need to talk about this option if thats the one you want to take. The last thing I want to see is a situation that blows up in your face, spoiling your plans.
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Can I Keep My Car If I File For Chapter 7 Bankruptcy
Also known as liquidation bankruptcy, Chapter 7 bankruptcy gives debtors the chance to achieve debt relief or forgiveness by liquidating certain assets. In some cases, this liquidation process can be a major deterrent, especially if you believe you will lose necessities like your home or vehicle. However, having access to reliable transportation is very important, and fortunately, many people are allowed to keep their vehicles under Chapter 7 bankruptcy.
If you or someone you know is facing financially difficult times, you may want to consider the benefits of filing for Chapter 7 bankruptcy. The Raleigh bankruptcy attorneys of the Bradford Law Offices, PLLC, can help you with the bankruptcy process and also file for exemptions so you can keep your vehicle. Contact us today at 919-758-8879 to discuss your situation at no charge.
Can I Keep My Car If I File Chapter 7 Bankruptcy In Georgia
Due to the lack of comprehensive public transportation and the distance between the suburbs and the city in the Atlanta metro area, many Atlanta residents who file bankruptcy are concerned about keeping their cars after filing bankruptcy under Chapter 7 so that they can continue to work.
The good news is that you can keep your car if you file Chapter 7 bankruptcy. If you own a car and file Chapter 7 bankruptcy you have three possible options regarding your car: you can surrender the car you can reaffirm the loan or, under certain circumstances, you can redeem the vehicle. These options are available for debtors who still have loans on their cars. Debtors who own their cars free and clear may keep their cars, as long as the cars are not worth more than the exemption for vehicles in Georgia.
Surrendering the vehicle in bankruptcy is a relatively straightforward process. You return the vehicle to the creditor, and your obligation on the loan ends, along with your ownership of the car. You may allow the creditor to pick the car up at your home or make arrangements to drop the vehicle off at the nearest location for that creditor.
If you are considering filing for bankruptcy please consult a qualified attorney. For a free consultation please contact the Law Offices of Charles Clapp at 585-0040 or email for more information.
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Keep My Car Bankruptcy
Are you considering filing for bankruptcy, but you don’t want to give up your car? Have you asked how you can get a keep my car bankruptcy? There is a way to keep your car and file for bankruptcy and here is how you do it.
First, if you file for bankruptcy, but you do not include your car, then you can keep it.
Now, if your car is paid off and you own the title to it, then you have to claim it as an asset. This could cost you your car to pay off other debts. What you can do is refinance your car or get a title loan so that it is not paid off. Do this before you ever contact a bankruptcy lawyer.
Use the money you get for your car loan to pay off some of your debts. This will help you because you will have a lien on your car, which will allow you to keep it, and you will pay off a few debts, which will give you less to include in your bankruptcy.
Second, if your car already has a loan against is, then you have nothing to worry about. Just don’t include it in your bankruptcy and continue to pay the payments on time. This will keep you from getting your car repossessed.
If you want a keep my car bankruptcy, then use either of these options to get it. Also, make sure you let your attorney know that you want to keep your car and they will do everything they can to make sure it will happen for you.
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