How To File For Bankruptcy And Keep Your Car

Filing for bankruptcy is quite scary. You can lose assets like home, vehicle, etc. The word liquidation is enough to give you goosebumps. Also, there may be several questions in your mind for your car like If I file bankruptcy what happens to my car? Or How long after filing bankruptcy can you buy a car?

Don't sweat, we have got you covered. In this handy guide, we will clear all your doubts about bankruptcy and your car.

Can I File Bankruptcy And Keep My House And Car?

It is possible to keep your assets even after you file for bankruptcy. Surprised? Well, you have to file for the right type and there are several other factors in play.

In Chapter 7 bankruptcy, you have to sell your assets to repay the unsecured debt. Several states offer vehicle exemption that allows you to keep a car of a certain value. You just need to be up-to-date with the loan payment. Also, if the equity of the car is below the exemption limit, then there is a high chance that you can keep it.

The Chapter 13 type is an excellent choice if you want to protect your assets. You can follow a repayment plan for 3-5 years. It allows you to catch up to the missed payments.

The Process: Declaring Bankruptcy While Retaining Your Vehicle

How to declare bankruptcy and keep your car? Here is the complete process to follow.

Step 1: Assess your financial situation

You have to analyze your financial condition and look for all the alternatives. You can hire a bankruptcy attorney who will assess your situation. He/She will guide you to file for the right type.

Step 2: Credit counseling course completion

You have to complete a credit counseling course before you apply for bankruptcy. This will help you find other alternatives.

Step 3: Petition filing

You must gather all the necessary documents and file the petition for bankruptcy in court.

Step 4: Automatic Stay

When you file for bankruptcy, the court will impose the automatic stay. This will stop all the collection calls.

Step 5: Attend 341 Meeting

Attend the meeting of creditors and a trustee where they can ask questions about your finances. You can clear their doubts.

Step 6: Get approval For Repayment plan (Chapter 13 only)

In Chapter 13, you have to offer a repayment plan. It must tell the ways in which you catch up on your loan payment for your car and other debt.

What Happens To Your Car When You File For Bankruptcy?

If I file for bankruptcy what happens to my car? Well, this depends on your type of filing. In Chapter 7, your car is an asset. If it is above the federal and state exemption limits, the trustee may sell it. If not, you can keep your car

In Chapter 13, you can keep your car. You have to make up for the missed payments during the repayment plan.

Strategies For Keeping Your Car During Bankruptcy

If I file for bankruptcy can I keep my car? Sure. Here are some strategies to increase your chance of protecting your car.

• Understand the federal and state exemptions: The federal law will allow you to protect up to 4450 dollars in vehicle equity. It doubles if you are married. States can offer better limits. Learn about the limit in your current state to protect your car.
• Stay up-to-date with car payments: You must stay current on your monthly car payments to protect the car.
• File Chapter 13: This type will help you keep your car while you repay the debt over 3-5 years. You have the chance to catch up on the missed payments.
• Try for a loan modification: Contact your lender to modify the terms of your loan. This can help you manage your payments easily and increase the chance of retaining the car.
• Reaffirmation: In Chapter 7, you can reaffirm your car loan. You must continue to make loan payments for the car to keep your car.

Life After Bankruptcy: Getting Back On The Road

Getting a car after bankruptcy can be easy if you follow the right strategies. Let us get into the details.

How Long After Bankruptcy Can I Buy a Car?

How soon after bankruptcy can I get a car? Well, this depends on the type of bankruptcy you have filed. In Chapter 13, you don't have to give up your car. You can keep it. You have to create and follow a repayment plan that lasts for 3-5 years.

Chapter 7 takes 4-6 months to complete. You will get your notice of discharge after around 90 of your 341 meetings. Once you get the notice, you can get a loan for a car. But you should wait for some time to build your credit report to get better loan rates.

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