Can I keep my car when I file Bankruptcy?

One of biggest fears that people face when they are considering filing bankruptcy is whether or not they will lose their home or vehicle. In this instructional video from the Law Offices of Mayer and Newton, Mr. Mayer explains what your rights are in regards to keeping your secured loans (an item that a creditor has a lien on as a guarantee of the repayment of the loan, or collateral) when filing a chapter 13 or 7 bankruptcy.

Can I Keep My Car in Bankruptcy?

Whether or not you can keep your car depends on several factors, such as your ability to keep up with the payments and the type of bankruptcy that you choose.

  • Under Chapter 13, you create a payment plan to repay the creditor what you owe on the car or home. 
  • If you file for Chapter 7, you must be able to keep up with the payments to keep your car. However, if the creditor is not willing to work with you when you file a Chapter 7, you ultimately may lose the vehicle.

If you have a car that's already paid off, you may be able to keep it if your car's value is within the bankruptcy exemption limits. If the car's value is more than the limit, the trustee may sell your vehicle to pay off your creditors in a Chapter 7.

What If My Car Is About to Be Repossessed?

Generally, if you do not have the car title or truck title, the creditor has the title. If you don't make the payments, they have a right to repossess your vehicle. Bankruptcy, either Chapter 7 or Chapter 13, will stop any repossession efforts. 

It's important that you know what your rights are regarding your home and vehicle before you file for bankruptcy. It is a felony to hide your vehicle.

But if the repossession agency comes to your steps and asks you for your car, do the following:

  • Simply tell them that you are about to file bankruptcy
  • Tell them do not breach the peace. They are required to leave if you tell them this.
  • Let them know you will not pay and kindly ask them to remove themselves from your property

Generally, to get a court order of replevin, it takes 30 days. We can generally file a bankruptcy in 3 days, or 3 minutes if we really have to. There is nothing to worry about as long as the repossession agent understands that you understand your rights. 

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