Bankruptcy solves many problems. The reasons for filing are many, but it's important to know that filing does not solve all your problems. In most cases, however, the pluses are far better than the negatives. One problem many face is keeping assets during a bankruptcy, namely your car and home. This guide shows you how to keep your car.
How the Law Works
Just as how you can get an automatic stay on your home to stop or delay a foreclosure, the same works for your vehicle. Creditors will have to halt any collections against you during the bankruptcy. This includes both Chapter 7 and Chapter 13. Chapter 7 is where you discharge debt. In this case, you have many options for keeping assets. Technically with Chapter 13 you are paying on debts, and creditors must allow this, so you can keep your car in most cases.
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How Bankruptcy Helps
In Chapter 7, as stated once you file creditors must stop collections. You have some options, including letting the car to be taken back or if you have money to make payments on it outside the bankruptcy. Getting your car repossessed may sound bad, but there are actually some benefits: the repossession will not show up on your credit report, quite often the car will act as final payment, and you have a better chance of buying a car at a later point. The other option is to pay on the car to your trustee; technically you can make direct payments on assets that you want to keep.
In Chapter 13, which is a debt repayment plan, you can also make payments but in a different way. What you can do is reaffirm a loan; this allows you to continue to make payments on the car and be protected by the courts. If you fail to make payments, there may be some problems, but if you can keep up, you lose nothing.
Other Options for Saving Your Car
There is one other option for help keeping your car. You can save your car from repossession by loan redemption, which is like a refinancing. In bankruptcy, you can qualify to redeem a loan in some cases, and therefore it would be like a brand new payment plans. So you can start fresh with a new payment plan. This will of course cost money, and if you fail to make payments, you may still lose your vehicle. But if you can come up with enough money to make payments, just like saving your home from foreclosure you can save your vehicle from repossession.
How to Get Help
If you're unsure of any of these processes, reading up on the basics is good. However, it does not replace the counsel of a professional bankruptcy attorney. Whether you want to file Chapter 7 or Chapter 13, it's important to have legal counsel, especially in cases where you may lose assets like your home and car. If you have further questions, it's time to talk to a bankruptcy attorney.
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