How you will deal with your vehicle when you file for Chapter 7 bankruptcy depends on your circumstances and the mix of possible scenarios. Sometimes, you are able to save your car by taking the opportunity on how to file bankruptcy at BKHQ, but other times you won’t. While you may be able to save your car from bankruptcy, do you really need to?
Chapter 7 bankruptcy is a quick process that usually is between 4 and 6 months. It is a liquidation bankruptcy in which your trustee will sell your property to pay your creditors. Because it is a short process certain lenders are unwilling to work with those who are involved engaged in this type of process.
After your bankruptcy has been discharged and you are able to discharge it, it’s usually much easier to obtain the loan for a car. Credit scores also take an impact during bankruptcy, so being prepared for the possibility of a bad credit car loan doesn’t cause any harm. Chapter 7 remains on your credit report for seven to ten years.
If you want to keep your car, the situation determines the choices for you.
If you own a car
If you own your car for no cost, you’ll be permitted to keep it if you meet the exemption guidelines in your state. The amount you can keep depends on the state in which you live and whether you be eligible for the state’s minimum exemption or for the federal minimum exemption. Not every state offers the option of this, so make sure to consult your trustee appointed by the court.
If the value of your vehicle is greater than the amount you’re permitted to exempt, you might be able to salvage the cost by combining a general exemption and your vehicle exclusion. If the exemption isn’t sufficient to pay for the worth of your car, your trustee may decide to sell the car and then distribute the proceeds to your creditors to settle some of your credit card debt. In this case you will usually be awarded an exemption amount which could be used to buy an affordable car.
If you own a loan for your car,
If you’ve got a vehicle loan typically, you have two options. However, it depends on whether or not you’re up-to-date on your loan at the time you finish Chapter 7. Two options are:
- Redemption Redemption In order to trade in your car, you need to pay the total value of the car in one lump amount. It’s often difficult to do this if you’re financially insolvent.
- Reaffirmation Reaffirming your loans, you have to reside in a state which allows it, or be listed as an option on the contract. To confirm that you’re signing a new agreement to your loan provider, perhaps with different terms, and you will continue to pay your loan throughout your bankruptcy.
If you’re behind in your repayments, then you might not be eligible to utilize these options since your lender is not obliged to offer them in the event that you’ve defaulted on the loan. Additionally, if you’re able to confirm your loan, you should be aware that any missed or late payment can result in the lender taking possession of your property automatically.
If you’re renting a car
If you’re leasing a car it is important to determine in advance whether you want to keep the vehicle and return the vehicle to the dealer. You will have 30 days from the day you file to sign your lease documents informing the intention to. You have the option of taking over the lease or deny the lease.
If you sign a lease, you will keep it, and to make all lease payments during your bankruptcy. If you don’t make one of them, you lose the contract and the landlord could take the car away from you.
If you do not want to rent then you are able to return the vehicle and are exempt of any obligation or liability to make any payments until the Chapter 7 has been cleared.
Do you require a new vehicle for bankruptcy?
If you’re in need of a vehicle in you Chapter 7 bankruptcy, you have to obtain permission through your trustee. It could be easier to obtain a low-cost vehicle in cash, however should you delay until you have discharged from bankruptcy is complete, you don’t require the approval of the court to carry additional debt, and you could be able to secure the loan for your car.
Even in Chapter 7 there’s still a chance that you are able to finance a car as that you have the right lender. Find a specialist financial dealer that works with bad credit borrowers after bankruptcy is likely the best option to take. We understand the difficulties it is to find a company that can handle difficult credit situations and we’re here to ensure that your search is as easy as it can be.
To Auto Express Credit we have created the nation’s largest group of specialty finance brokers that are affiliated in subprime lending. These lenders deal with those who have poor or no credit or have already declared bankruptcy and have credit scores that are not satisfactory. To begin the process of getting the car you want just fill out our simple free, no-obligation auto loan application, and we’ll take care of the rest!