What Happens To My Car In Bankruptcy?

If you own a car or lease a car, you will need to decide what happens to your car in bankruptcy. You have the choice to keep your car and the debt associated with it, or you can choose to surrender the car in bankruptcy. This means the car goes back to the lender, and the debt goes with it. There are one or two exceptions, which we will address. In summary, you can either keep the car and the debt, or ‘get rid of’ the car and get rid of (discharge) the debt.

How Can I Keep My Car In Bankruptcy?

If you want to keep the car in a Chapter 7, you will need to be current on payments by the date of your 341 meeting. You will sign a Reaffirmation Agreement with the lender, which will contain the same terms you had prior to the bankruptcy. The reason for the agreement is the filing of your bankruptcy technically relieves you of the obligation to repay the loan; however, if you want to keep the car, you will need to renew the agreement. The Reaffirmation Agreement accomplishes that.

If you want to keep your car in Chapter 13, you can do so. Your interest rate may decrease due to the interest rate set by the bankruptcy court. Additionally, if you have had the vehicle for more than 910 days, you may be able to lower the balance on the loan in Chapter 13, which can be a tremendous benefit.

How Do I Surrender My Car In Bankruptcy?

If you want to surrender the car and the debt, it is easy. We file your bankruptcy and reach out to the car lender to make arrangements for them to pick up the car or have you drop off the car in the alternative.

You Have Options

The upside to addressing a car in bankruptcy is that you have options. Most clients are incredibly happy with the results of bankruptcy including the ability to have flexibility regarding vehicles. The rules of bankruptcy heavily favor the debtor—the person filing—and as a result, if you would like to keep a vehicle while discharging all unsecured debt, it is almost always an option.

Speak With A Bankruptcy Lawyer Today

If you would like to speak with us about what happens to your car in bankruptcy, you can request a free consultation. Just call 704.749.7747 or click HERE to request a time to talk. If you would like to watch a short video from Chris Layton, it may help you make a decision regarding working with us. We know you have choices. We hope you choose Layton Law.