Filing for bankruptcy can be a difficult decision. While it can provide you with a fresh start financially, you must consider a few things.
One of the most important concerns is whether or not it is possible to keep your car while going through the bankruptcy process. The answer is yes! It is possible to file for bankruptcy and keep your car as long as you follow certain steps.
Gather and Analyze Necessary Documentation
The first step in filing for bankruptcy and keeping your car is to gather all of the necessary documentation related to the car’s financing. This includes the loan agreement, loan payments, insurance documents, title registration, etc.
Once you have gathered all of this information, analyze it to determine exactly what you owe.
Redeem or Reaffirm Your Car Loan
Once you have determined how much money is owed on your loan, you will need to decide if you want to redeem or reaffirm your loan.
Redemption allows you to pay off your loan balance at its current value – not what was originally agreed upon when you took out the loan – in one lump sum payment.
If you choose this option, the creditor may not take any further action against your vehicle even if a balance is due on the loan after redemption. You may also choose to reaffirm your loan with either the original lender or another lender of choice. This involves entering into a new contract with a new interest rate agreement (if applicable). You must be able to make payments according to this new agreement for this option to be viable.
Filing For Bankruptcy with Your Car Loan
Now that you have chosen which option will work best for keeping your car during bankruptcy proceedings, it’s time to begin filing for Chapter 7 or Chapter 13 Bankruptcy with your auto creditor included in those filings. All paperwork associated with these filings must be filled out accurately and completely for them to be accepted by the court system.
Once approved by the courts, an automatic stay goes into effect. This prevents creditors from taking any further action against any assets listed on these filings including vehicles.
Debtors must continue making payments on their loans during this period as required by their contracts or risk losing their cars once again due to non-payment or failure of redemption/reaffirmation processes outlined above.
Filing for bankruptcy does not necessarily mean that individuals must give up their cars to achieve financial freedom. However, the best way to protect your assets is to work with an experienced bankruptcy attorney. They can also help you with other aspects of bankruptcy, including enrolling in a mandatory credit counseling course and rebuilding your credit once you complete your bankruptcy.
Do not take your decision to file for bankruptcy lightly. It’s important to understand the process so it’s easier and less stressful. With the right guidance and research, you can take the necessary steps to keep your car while filing for bankruptcy.