Can I Keep My Car If I File Bankruptcy? Answered
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In a Chapter 13 case, Hannah could also keep her truck as long as she can afford the payments. If your answer to either of these questions is "no," a repayment plan in a Chapter 13 case might provide you with the means to keep your car and bring your payments current. 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. A bankruptcy’s “automatic stay,” by the way, will halt repossession proceedings if they’ve started before you filed.
The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act eliminated “drive through” car loan agreements for bankruptcies. Before the act, consumers and car lenders could continue with whatever agreement they wanted, ignoring the bankruptcy. While drive-throughs are now against bankruptcy rules, it still happens and courts rarely enforce it.
Can I Keep My Car If I File Chapter 7?
But if the foreclosure sale price is less than what you owe on the mortgage, your remaining mortgage debt can be discharged in bankruptcy. Because this chapter of filing is for those who earn an income, it focuses on repaying the entirety of your nonexempt equity on your vehicle. If you have a car loan, your repayment plan will include monthly payments on your loan. Many people have crushing car loans that are difficult to keep up with.
Once a creditor or bill collector becomes aware of the filing of a bankruptcy protection, it must immediately stop all collection efforts. After you file the bankruptcy petition, the court mails a notice to all the creditors listed in your bankruptcy schedules. Creditors will also stop calling if you inform them that you filed the bankruptcy petition, and supply them with your case number. In some cases, you or your attorney should contact the creditor immediately upon filing the bankruptcy petition, especially if a law suit is pending.
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The state allows a motor vehicle exemption of just $3,000. That leaves a nonexempt portion of $6,500, an amount almost certain to interest a Chapter 7 trustee and creditors. If Darrin opted to file a Chapter 13 instead, he could keep the car, but he would pay the nonexempt portion of $6,500 to his unsecured creditors through his Chapter 13 plan.
The properties that you can safeguard with bankruptcy exemptions depend on the state you’re from. Each state designs its exemption list, which often covers key assets. Items you may be allowed to keep include clothing, work tools, household items, electronics and even sometimes, some equity in a vehicle.
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Whether your equity in the property exceeds the bankruptcy exemption for that type of property. However, the court probably won’t just “give” you your house. If you’ve defaulted on your mortgage, your lender has the right to foreclose and take away the house . Whether you get to keep your house under Chapter 7 depends on your equity, mortgage, and state exemptions. Filing for bankruptcy doesn’t automatically mean you’ll lose your house. Both Chapter 7 and Chapter 13 bankruptcies have provisions to avoid this outcome, such as the “automatic stay” to temporarily stop foreclosure proceedings that would take the house away.
You can get the money from friends & relatives or make payments with your post-bankruptcy income. The only time you’re required to surrender your car in Chapter 7 is when you can’t exempt all equity. Credit unions have different requirements than traditional banks and other lenders. Call your local credit union to find out if they can help you get a car loan after bankruptcy. It's also possible that a credit union might be more willing to approve your loan if you're already a member of their institution.
Can I Keep My House And Car In Bankruptcy?
It applies to your residence, whether that’s a single-family house, condominium, trailer, or farm. Federal and state bankruptcy exemptions are designed to help you protect some property when you are going through the bankruptcy process. In Indiana, most people can protect some assets through exemptions, depending on their level of income, what they own, and which bankruptcy chapter they file under. Some individuals can exempt everything they own, while other people may need to sell some assets to pay creditors. 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.
Oklahoma allows you to exempt up to $7,500 of equity in your vehicle. The Bankruptcy Court collects a fee to file a bankruptcy petition. It now costs $299 to file for bankruptcy under chapter 7 and $274 to file for bankruptcy under chapter 13, whether for one person or a married couple.
To raise your score, prioritize paying your credit card bills and other loan payments on time and in full. Using less of the credit you have available can also boost your credit score. In addition, you might think about working with a nonprofit credit counseling agency if you need help more assistance improving your credit after bankruptcy.
In a Chapter 7 bankruptcy, the bankruptcy trustee appointed by the court to handle your financial affairs organizes and sells assets considered “nonexempt” under the Bankruptcy Code. The proceeds pay your creditors based on priorities spelled out in the code. Chapter 7 allows you to keep property “exempt” under the code . The trustee sells remaining assets, if there are any nonxempt from the bankruptcy.
The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer. If you have a car payment, determine whether it will be current when you file. You can't include sales costs when reporting property values on your bankruptcy paperwork. However, a Chapter 7 trustee will consider sales costs when deciding whether to sell property. Indiana does not have a vehicle exemption, per se, but you can use the state’s “wildcard exemption” to protect equity in your car, truck, or SUV. As an example, let’s say your state exemption is $7,000, and your car is worth $6,000.
When the exemptions are taken into consideration, whatever is left of nonexempt equity is the minimum amount you will have to pay your creditors during your payment plan. Chapter 13 is specific to those still earning an income and it allows debtors to reorganize debts. With this filing, you may be able to pay less on some of your debts.
As a home or car owner, you probably want to keep the property that’s rising in value. However, if you are trying to pay off debts and declare bankruptcy, the court may be more likely to sell items of value to repay your creditors. If you give the car back as part of your bankruptcy filing, you’re relieved from paying the loan. The discharge protects you even if the car sells for less than what you owe. If you have gotten behind on your vehicle payments, the Chapter 13 plan can bring your account current through the debt consolidation process.
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