If you want to keep your car, you have to take some action to keep the lender from getting your car. If you’ve owned the car for greater than two and a half years and 910 days, and you’re, actually upside down on it. While you can keep your house in chapter 7 bankruptcy in most cases, it is possible that you may lose your home. Because filing for bankruptcy doesn’t get rid of the lender’s lien, if you want to keep the car, you’ll have to continue making payments or pay for the car another way. If you aren't making payments on a car, then you'll be able to keep it if its value falls under your state's vehicle exemption amount. Most states provide a bankruptcy exemption of a certain amount for a vehicle. Impact of Chapter 7 on Your Vehicle If you are filing for bankruptcy under Chapter 7, you may be able to keep your car by using the exemption for it. So how long can the debtor keep her car after filing chapter 7 bankruptcy if she doesn’t want to keep paying for it and can’t afford to pay the creditor the car’s value in a lump sum? When you file for Chapter 7 bankruptcy protection you’re looking to wipe out debts and keep as much of your property as possible. This means that anyone fiing bankruptcy can protect certain types of property up to a certain amount. Chicago - … Chapter 7 Bankruptcy. Your ability to do so will depend on: ... Also, some trustees will let you pay to keep your car. In exchange, the bankruptcy trustee is allowed to sell your nonexempt property and use the proceeds to pay your unsecured creditors. Each state decides the property its residents can keep (it will be listed in the state’s exemptions) and whether its residents can use the: If you can exempt all of the equity in your car, you’ll be able to keep it. Viewer question: What happens to my car in Chapter 7 bankruptcy? People with lots of equity in their houses lose a portion of the tax refund for one year. In some states, the information on this website may be considered a lawyer referral service. People often wonder how Chapter 7 bankruptcy will affect their ability to keep their car. While you can keep your home, car or truck, and retirement accounts, some other things become part of the bankruptcy estate under Chapter 7 filing rules. You can only do this if the car is exempt or the trustee has "abandoned" the property (decided not to sell it). In chapter 7 bankruptcy, a personal auto exemption will protect up to $5,000 of equity in your car or cars ($10,000 if you are 60+ years of age or disabled) from the bankruptcy trustee. With the redemption option, the lender is paid the current value of the vehicle in one lump sum. All Rights Reserved. In Minnesota, people without a lot of equity in a house, and renters, get to keep their tax refunds. Chapter 13. Can I Buy a House After a Chapter 7 or Chapter 13 Bankruptcy?How Long? Exempt the equity in your vehicle as permitted by Missouri law. You will need to know whether the lender considers your car loan in default before you convert to a Chapter 7. In understanding how much protection you qualify for includes reviewing the amount of equity you have in your vehicle. You have a few options to pursue if you want to keep your car in a Chapter 7 bankruptcy, but you have to act fast or it can be used to pay back your creditors before your remaining debt is wiped away. Keeping Your Car. In many cases, a bankruptcy filer can choose to either keep the vehicle or surrender it to the lender. I’ll let you know exactly what filing a Chapter 7 bankruptcy would look like, and what filing a Chapter 13 bankruptcy would look like, and how that would affect your ability to keep your car or your house. In Chapter 7 bankruptcy, most or all of your debts are discharged. Keep reading to learn what a bankruptcy filing means for your car. The following options are available when you file Chapter 7 bankruptcy: If you own a car, you can keep it under either the Tennessee or federal bankruptcy exemptions as long as it does not exceed a certain value. A Chapter 7 bankruptcy is a short process, generally lasting only four to six months. If you are caught up on your car payments, one way to ensure you keep your car in Chapter 7 bankruptcy is to either pay a lump sum to purchase the car at its current value or enter into a reaffirmation agreement, which is essentially a new contract. If you are no longer making payments on a car, and it has no equity beyond the exemption, you can protect it entirely. For instance, if you owe $15,000 on a car that’s only worth $5,000 at auction and surrender that car in chapter 7 bankruptcy, you will not be liable for the remaining $10,000. When you own a car and file for Chapter 7 bankruptcy, what happens to your car will depend on whether or not you owe money on the vehicle. If you are behind on car payments, your car may be sold off. If substantial nonexempt equity exists, however, here’s what the trustee will do: Some trustees will allow you to pay the trustee for the nonexempt equity and keep the car. As you know, a Chapter 13 is called reorganization bankruptcy. If you own a car, you’ll likely be able to protect (exempt) a particular amount of the vehicle’s equity (each state’s law varies). Some states allow you to use either the federal exemption list or your state's list of exemptions; others require you to use only your state's exemptions. (If you’re behind and want to pay the arrears in bankruptcy, read Your Car in Chapter 13 Bankruptcy: An Overview.). To learn more about these options, see Your Car in Chapter 7 Bankruptcy. Debtors usually use the income earned after the bankruptcy or get a loan from friends or family. Chapter 7 bankruptcy allows you to keep or surrender your car or truck. If you are caught up on your car payments, one way to ensure you keep your car in Chapter 7 bankruptcy is to either pay a lump sum to purchase the car at its current value or enter into a reaffirmation agreement, which is essentially a new contract. Usually, the price you’ll have to pay will be discounted by the amount the trustee saves in sales costs. It is a common misconception that you have to give up everything valuable during chapter 7 bankruptcy. Many consumers may wonder if they can keep their vehicle in a Chapter 7 bankruptcy. This option could be a game changer because it saves you money in the long run. Even if your payments are up to date, creditors may still make you pay the remaining balance to keep the vehicle. Keep in mind that the bank would much rather settle the amount and get a lump sum payment versus repossessing the vehicle so don’t be afraid to ask for a better deal. How to Assume or Reject a Car Lease. It's important to note that the vehicle owner only has to pay the amount of the car's current value. Under Chapter 7, you can keep assets, including your house and car, if the asset is exempt under federal or state law. If you are still making monthly payments on the car however, it could be a different story. A car can be redeemed in Chapter 7 whether or not the payments are current. There are a number of strategies you can use to keep your vehicle when filing for Chapter 7 bankruptcy. These include the following: Bankruptcy exemptions – the state of North Carolina allows you to exempt up to $3,500 in equity on your car, truck, or other type of vehicle. Must the car be surrendered immediately? 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