Bankruptcy is the process by which a person or business is declared bankrupt. This generally means that an individual’s debt-to-income ratio has risen to a point where the person can no longer repay their debts and instead seeks protection from creditors. Bankruptcy means that a person or business can no longer maintain the life they were living. Although this can be a scary proposition, it is an excellent opportunity to start fresh and regain financial health.
When filing for Bankruptcy, one must understand that to do so, one must liquidate anything of value. This means that when filing for Bankruptcy, one must consider what they are trying to protect. Here are the ways you can file for Bankruptcy and keep your car.
1.The Type of Bankruptcy you’re Filing
The type of Bankruptcy you’re filing will determine the solutions you have available to protect your car. If your vehicle is currently in a mechanic’s shop at this time, then you’re probably going to have little option but to file for Bankruptcy. Filing for Bankruptcy and losing your car would be too great of a loss.
If your car was in a garage or on the road and already stolen before filing for Bankruptcy, then you may have different options open to you. The types of Bankruptcy also determine the types of protection you can have for your car. If you are filing for Chapter 13 bankruptcy, you can keep many of your assets and convert those assets into debt relief. You can establish a plan to pay the creditors what is owed and borrow money from the creditors in an effort to get your car back. On the other hand, if you file for Chapter 7 bankruptcy, you will lose all assets, including your car, and it must be sold off as part of the Bankruptcy unless there are special circumstances.
Some of these special circumstances might include a person being able to prove their car was stolen before filing for Bankruptcy. If the person who stole your car is not receiving payments from your old debts, then a bankruptcy court might still be able to allow you to keep the vehicle. The other option might involve proving that the person has been living with you and has been earning money, making payments on a debt that doesn’t go out until after you file the Bankruptcy. It’s important to note that if you are in Chapter 7, there will be no protection for your car.
2.The Value of the Vehicle
The car’s value will be a significant factor in determining whether you can keep your car or not. If you have a car worth $500, then there’s little chance that the court will allow you to keep it. You might not have enough money to pay off those creditors and maintain the car. In this situation, you will be forced to sell off the car and all of your other assets to satisfy those creditors.
You will have a better case if the value is high enough. If the official value of your car is $10,000, but you can prove to the court there’s an additional value of $15,000 or more, then you may have a good chance of getting to keep your car. This is especially true if there’s no similar make and model for sale in that market for less than what it would cost for you to buy another one.
3.If You Own, Lease, or Are Still Financing the Vehicle.
Owning, leasing, or financing a vehicle is a great way to protect yourself and maintain your vehicle’s access. This happens when you are still paying off a vehicle on a lease or financing agreement and file for Bankruptcy. In this instance, there’s no way that the creditor can take the car, as you have a contract in place that states that you must make those payments.
If you are paying off your car without financing or leasing, this protection doesn’t apply to you. That’s because once your car is paid off, it belongs to you, and the bank has no claim.
4.Exemptions in Your Area
Some states or counties will allow a person to keep their vehicle if they file for Bankruptcy. You can file an exemption with a court to allow you to have this protection. This exemption will waive the regular restrictions placed on your car’s legal value, allowing you to keep it while still filing for Bankruptcy.
In the case of Bankruptcy, you must be prepared to lose any assets you have gained and acquired in the past. However, there is a chance that you can keep your car if it’s in good condition, valuable, and protected by a contract of some sort.