In a majority of states, you can easily keep your car after filing for chapter 7 bankruptcy if you want to. However, the results in every bankruptcy case can vary depending on your actions, your lender, and the bankruptcy trustee.
First of all, you should consider whether keeping your car is beneficial or not. For example, if you have a debt far greater than the value of your car, you are paying abnormally high interest rates, or if the car needs expensive repairs, letting it go in the bankruptcy might be your best option.
If you want to keep the car, your bankruptcy trustee might ask you a few questions regarding your car, and your equity in the vehicle. Here are some of the best options you can use for your car after filing chapter 7 bankruptcy. Getting bankruptcy lawyer help in this process is very important.
Reaffirm The Car Loan
When you file for a chapter 7 bankruptcy, you are basically asking the court to discharge all of your debts. However, if you want to keep your car, you can ask the judge to exclude the discharging of car debt. This is called reaffirmation, and you are basically promising the call lender to re-pay their payments even after filing for a chapter 7 bankruptcy.
After reaffirming, you can continue to make the payments for your car, and it will be saved from repossession. An additional benefit of the information is that you can keep building your credit score even after filing for bankruptcy.
Ride Through Without Reaffirmation
If you do not want to reaffirm the car debt, you can simply ride through even after the car re-payments get waived by the court. This way, you are re-paying a debt that you no longer have to repay after filing chapter 7 bankruptcy.
So, these are the options you have if you want to keep your car when filing for chapter 7 bankruptcy.