When a person decides to file for individual bankruptcy, he or she will have very personal preferences when it comes to what sacrifices he or she is willing to make in order to get a fresh start from his or her debts. For many people, the line is drawn at the selling of their car. A person’s car can be invaluable to his or her independence as well as his or her ability to get to work and earn an income.
The good news is that it may indeed be possible to go through bankruptcy while keeping your vehicle; however, it also depends on your specific financial situation as well as the Chapter that you file for bankruptcy under.
Filing with Chapter 7
Under Chapter 7, it may be possible to keep your car, but it depends on the value. For example, if your car is worth $30,000, and you can only exempt $10,000 of it, then $20,000 of the car’s value will be available to your trustee for distribution.
In the case of Chapter 7 bankruptcy, you have three main options. You could simply give up the vehicle, find a way to make a settlement with the trustee by paying cash for some part of the asset, or alternatively choose instead to file for Chapter 13 bankruptcy.
Filing with Chapter 13
In Chapter 13 bankruptcy filings, you can protect more assets than you can under Chapter 7. Therefore, it might be possible to secure the value of the car and repay the amount in your payment plan.
If you are looking into ways that you can keep your car while filing bankruptcy, you should conduct careful research to understand your options.
Source: Bankrate, “3 options to protect your car in bankruptcy,” accessed Dec. 15, 2017