Can I keep my car if I file Chapter 7 bankruptcy?

by Dan Nunley

Car keysUsually the answer is yes. But there are many factors that affect whether or not a person filing bankruptcy can keep their car or truck including how much your vehicle is worth, how much you owe on the vehicle and how far behind you are on the payments at the time you file for Chapter 7 bankruptcy.

Let me begin by talking to the people who have a loan and are making payments for their vehicle. You have three (3) choices:

First, you can surrender or give back the car.

You need to be honest with yourself and ask if it is in your financial best interest to keep your car or truck.

  • Can you really afford the vehicle?
  • Will your financial situation make it difficult for you to make the payments each month?
  • Do you have equity in the vehicle or are you upside down owing more than the vehicle is worth?

If you can’t afford the payments, or you owe significantly more than your vehicle is worth, Chapter 7 bankruptcy will allow you to surrender or give back your vehicle and walk away without owing another penny. That can be a good deal for many people who are in a bind regarding their car or truck. Then you get something to drive that you can really afford. It may be just a “beater” but that’s OK if it will get you back and forth to where you need to go until you can save up for something better.

Second, you can redeem the car.

Redemption is the process of buying your car back from the bank/credit union/finance company for the fair market value of the car. Did you get that? Buying back for what the vehicle is really worth as opposed to what you owe for it. If you are substantially upside down, redemption can be a terrific deal.

However, redemption requires a lump sum payment and most people filing bankruptcy don’t have a large amount of cash just sitting around. But maybe a family member or friend could loan you the money. Or you can check with companies that specializes in financing vehicle redemptions such as  722 Redemption Funding. These companies charge high interest rates but it can still be a good deal since you would be significantly reducing the principal owed on the vehicle. If you are considering obtaining financing for a redemption, you should investigate the terms before filing for bankruptcy to make sure that you meet the qualifications for a redemption loan.

Third, you can reaffirm the car loan.

Reaffirmation is the renewal of a loan between a lender and a borrower. This means that if you sign a Reaffirmation Agreement, the bankruptcy will not discharge or wipe-out the vehicle loan. You would still owe that money to your vehicle lender and should you not be able to pay in the future, your lender would be able to pursue all legal methods of collecting that debt.

In order to reaffirm your car loan, you will need to be current on the car. And your budget must reflect that you have the ability to make the car payment without it being a financial hardship.

If you lease your vehicle:

If you are current on your lease payments, then you may assume the lease and continue with your contract if you choose. If the lease payments are too high, then you may wish to reject the lease and turn the car back into the dealership.

If you don’t owe money on your vehicle:

If you own your car or truck outright, meaning there is no loan on the vehicle, then in Oklahoma, you can keep the vehicle with no problem if it is worth $7,500.00 or less. Each bankruptcy debtor is allowed a $7,500.00 exemption for a motor vehicle so if a husband and wife file bankruptcy together, they can stack or combine their exemptions and protect a single vehicle worth up to $15,000.00. If the vehicle is worth more than the allowed exemption amount, then you would owe the difference. If you were unable to pay the Chapter 7 trustee the difference, then the trustee could take your vehicle, sell it at auction, and give you back $7,500.00/$15,000.00.

Each bankruptcy case is different, so the decision whether to keep or return a vehicle must be made on a case-by-case basis.

If you’re struggling with debt problems and would like to know more about how bankruptcy may be able to help you, contact Dan Nunley today by completing the “Contact Dan” form on the right side of this page. I’ll get back in touch with you as soon as I can to schedule a FREE initial telephone consultation. I would count it a privilege to be able to visit with you in a relaxed and confidential environment where I’ll answer all of your questions in plain English and give you the straight scoop on the pros and cons of bankruptcy as related to your specific situation.

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BankruptcyBill.us » Blog Archive » BLT (Bankruptcy Lawyer Topics): “Cars!” – by Matt Leichter, Esq.
January 15, 2010 at 4:33 pm

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Pam Edwards August 18, 2009 at 10:17 am

If I have already been to court and filed my bankruptcy, and my vehicle was not included (still paying on) do I still have the choice to turn the vehicle in to the company I am paying. I filed bankruptcy last week.

Dan Nunley August 18, 2009 at 8:35 pm

Pam,

I assume that when you say “my vehicle was not included” that you don’t mean that you failed to list your vehicle and vehicle lender in your bankruptcy documents. Whether you intend to keep your vehicle or surrender it, you have a duty to disclose all of your assets and all of your debts. Therefore, you should have scheduled your vehicle as an asset on Schedule B and the amount you owe & to whom as a secured debt on Schedule D. You would have stated your intention regarding the vehicle on the Statement of Intent.

If you are represented by an attorney, you should seek his/her advice. However, if you are representing yourself, then if you failed to disclose either the vehicle or the debt, you must amend the appropriate schedule. If you have simply changed your mind regarding keeping/surrendering the vehicle, that is not a problem, you can inform the Trustee of your intention at the First Meeting of Creditors.

Dan

Pam Edwards August 26, 2009 at 7:55 am

Hey Dan,

Thanks so much for the advice. The car was listed in the bankruptcy, but I wanted to keep it I think this is called a refimation or something of that nature when you agree to continue to make payment on the vehicle. Now that i have had time to really think about this i want to surrender it. My lawyer has been on vacation for 2 weeks this is driving my crazy!! So is there a way to surrender the car since my meeting with the trustee was just 2 weeks ago?

Pam Edwards August 26, 2009 at 7:57 am

Dan your the Man!!! Thanks so much for being here for me in my time of need. Its alot that I really dont understand about chapter 7 bankruptcy.

Dan Nunley August 26, 2009 at 9:21 am

Pam,

Since you are represented by an attorney, you really need to seek advice from him/her when back from vacation. If a Reaffirmation Agreement has been filed, and you have changed your mind, the Reaffirmation Agreement may be rescinded. Your attorney should know what to do.

Dan Nunley

PEDRO C MARTINEZ December 3, 2009 at 4:38 pm

I signed a Statement of Intention to re-affirm my Toyota car loan but they didn’t send any reaffirmation agreement nor I signed any docs for the loan. I called them up after my chapter 7 discharge and Toyota told me that I will not received monthly bill anymore l because the loan was discharged. I am current on my payments and Toyota doesn’t bother me. However,if I decide to return my car, will I be slapped for any deficiency or tax consequences for any loss once they re-sell my car?

Thank you very much.

Pedro

Dan Nunley December 4, 2009 at 3:59 pm

Pedro,

If a Reaffirmation Agreement wasn’t filed in your bankruptcy case, then the debt you owed Toyota was discharged in your bankruptcy. Therefore, should you decided to surrender the car to Toyota in the future, Toyota would get the car and that’s it. Because of your bankruptcy discharge and absence of a Reaffirmation Agreement, Toyota would not be allowed to seek to recover any deficiency that may exist at that time between the contract balance and the fair market value of the car.

Dan Nunley

Rachel December 12, 2009 at 11:00 am

Hi Dan,

I filed chapter 7 about 3 years ago, and I never reaffirmed my car. I have been making my monthly payment on time as agreed, however this is where it gets complicated my fiance is a co-signer on the car and he did not file chapter 7. If I decide to surrender the car would they then go after him for the balance owed? Also, since it is not reaffirmed would they be more likely to settle on a balance less then what is owed to pay off the car?

Rachel

Dan Nunley December 12, 2009 at 2:32 pm

Rachel,

If you surrender the car, the finance company could seek to collect any deficiency after the sale of the vehicle from your fiance. Whether the finance company would go after your fiance, I don’t know. That really depends on the specific facts of your situation. Regarding the possibility of the finance company accepting a settlement offer, I don’t see any incentive for them to do that since there is a co-signor who would be legally liable for the full balance.

Dan Nunley

Emily December 15, 2009 at 10:12 am

I am fifteen days late on my car payment and unable to make the payment prior to the December 14 deadline I was given (repo notice). I would not normally be eligible for a Chapter 13 due to income restraints. I would not be able to fund a plan. Can I file a Chapter 7 to stop a repo and make the payments to the bank? I know that they will have to file a Motion to Lift Stay in order to repo the vehicle-how will all of this work? I would like to be able to keep the vehicle

shermain December 15, 2009 at 10:36 am

Hello, I am currently trying to figure out after a discharge thru chapter 7, I went to reaffirm my car loan, I received a statement in the mail stating I need to pay the past due amount. I tried to make an arrangment with them but they are not willing. I know I can surrender the car to them but is there a way amend my chapter 7 to include the car loan just incase they seek to collect after the sale of the vehicle.

Dan Nunley December 16, 2009 at 11:21 pm

Emily,

As you appear to be located in Alabama, I would suggest that you contact a knowledgeable bankruptcy lawyer near you for legal advice regarding your specific situation. If you don’t know of any bankruptcy lawyers, I suggest using the Attorney Finder provided by the National Association of Consumer Bankruptcy Attorneys. I wish you well.

Dan Nunley

Dan Nunley December 16, 2009 at 11:31 pm

Shermain,

Bankruptcy case law and procedure varies from jurisdiction to jurisdiction. In Oklahoma where I practice, if a debtor received a Chapter 7 discharge and a Reaffirmation Agreement was not filed on the debtor’s car loan, then the car loan would have been discharged in the bankruptcy. If that debtor decided to surrender the car to the finance company thereafter, he would not owe a single penny on the car loan.

Since you appear to live in Florida, I would suggest contacting a knowledgeable attorney near you for legal advice regarding your specific situation. If you don’t know of any bankruptcy lawyers, I suggest using the Attorney Finder provided by the National Association of Consumer Bankruptcy Attorneys. I wish you well.

Dan Nunley

Laura January 9, 2010 at 8:47 pm

Hi Dan,

I have been in a chapter 7 BK and have not received my discharge yet. I live in Calif and I know law vary from state to state. I included my car in the BK because I could not afford the payments. I owe way more than the car is worth. Bank would not even talk to me about reducing the payments. Once I filed I got an reaffirmation offer from the bank reducing the principle down to 9600 and taking the 17% interest rate to 8%. That was in August 2009 saying I had to start making the payments beginning Sept 9, 2009. I got the papers one day before my hearing date so I signed it. It took them 4 months to set a court date for the reaffirmation hearing and weeks before the court date I was laid off my job because they were downsizing staff. I am currently on unemployment and I know the court will not agree to allow me to affirm because in their eyes it will be a financial hardship. I will make the car payment no matter what because I need a car. They continued my reaffirmation hearing to Jan 20 and I wanted to know if I should do anyway to at least show the bank I am not trying to blow them off. I have made every payment according to the affirmation agreement. I have tried to call the bank attorney but they will not return my calls. I cannot pay off the car in a lump sum but can continue to make the payments according to the agreement that I signed. Will they still repossess it even though I am paying the new payments and I am current? What should my next step be? My attorney says wait and see what happens but I don’t want to find out my car has been towed one day when I so to the store especially since I have been paying. Suggestions??
Thanks
Laura

Dan Nunley January 10, 2010 at 9:40 pm

Laura,

Reaffirming in your current situation would be highly inadvisable as I’m sure you realize. My experience here in Oklahoma is that the vast majority of vehicle lenders would rather be receiving regular payments than have the vehicle back so I would think that the bank would continue to work with you. But I don’t have a crystal ball and there’s no guarantee that the bank will do what makes sense to me. Since you have tried to contact the bank but have had no luck, there’s no way that you can be sure that the bank won’t decide to repossess your car. The only way that I can think of for you to be absolutely sure that you aren’t left without transportation is for you to be proactive and get another vehicle, even if its a beater, and surrender your current car to the bank. At least that way, you wouldn’t have to continue looking over your shoulder worried about being left stranded and on foot. I wish you well.

Laura January 10, 2010 at 10:12 pm

Thanks for your response.` That is great advice. Best wishes to you and yours as well.

Laura

Zing January 14, 2010 at 10:58 am

I filed a chapter 7 in the state of Georgia and signed a reaffirmation agreement for my car. I since then come into some financial strains and my bankruptcy was discharged. My car was picked up due to the discharge. I was aprox 4 months behind on the note. Is there any way I could get out of this debt? I contacted the bankruptcy court and was told that I coud reopen my case but the judge would make the determination on whether I can get the debt discharged. Do you have any suggestions on how I can resolve this matter without having this debt placed on my credit since my chapter 7 was discharged?

Dan Nunley January 14, 2010 at 2:07 pm

Nzinga,

What you have experienced is one reason that I rarely advise signing reaffirmation agreements. As I am licensed to practice law only in the state of Oklahoma, I cannot advise you on the local rules and procedure in the Georgia bankruptcy court where you filed your case. I would suggest that you contact your bankruptcy lawyer, or if you represented yourself, that you seek the advice of a knowledgeable bankruptcy lawyer in your area. I wish you well.

Dan Nunley

Mike Lucas January 28, 2010 at 4:19 pm

Hello Dan,

I have a couple of questions. My wife and I are looking to file Chapter 7 and we were going to wait and use our tax refund to pay for legal services. We have a truck that we are still making payments on and it’s at the point where it’s loan value is a good resale price. Can we still keep it or is it one of those 50/50 questions? We also need a second car. Can I use my tax money to buy a used car worth around $2500. We have two babies and I can’t leave my wife car-less. I have a company truck right now but in the current times they might be taking that away, so I will need wheels. Or should I spend the money and just wait till summer or fall to file bankruptcy when I’m more broke.. lol

Dan Nunley January 28, 2010 at 11:57 pm

Mike,

Since I practice bankruptcy in Oklahoma and you appear to live in Florida, I can only suggest that you seek legal advice from a knowledgeable bankruptcy attorney near you. A good way to find one is to use the Attorney Finder provided by the National Association of Consumer Bankruptcy Attorneys. I wish you well.

Dan Nunley

michael January 30, 2010 at 5:51 pm

Dan, I had a car repossessed and I still owe the finance company money. If I buy a new car with cash or get a car as a gift, can they come take my new car since I still owe them money? I live in New York by the way.

Dan Nunley January 31, 2010 at 8:52 am

Michael,

The answer to your question depends on state law and since you live in New York and I practice in Oklahoma, I suggest that you seek advice from a knowledgeable attorney near you.

In Oklahoma, a finance company who is owed money due to a deficiency from a repossession has only an unsecured debt which would not allow it to legally go and take another vehicle of the debtor. What could happen though is that the finance company could sue the debtor, get a judgment, and then seek to collect that judgment by garnishing the debtor’s wages or filing liens against the debtor’s property.

Dan Nunley

Richard February 3, 2010 at 9:55 am

My ex-wife is still on the truck loan I have. I plan on filing bankruptcy but wanted to keep the truck. Will this filing have an effect on her credit? If it does I have another option. My uncle has offered to buy the truck from me but I don’t want there to be any problems with the filing. Any help appreciated.

Dan Nunley February 4, 2010 at 9:44 am

Richard,

Since I practice bankruptcy in Oklahoma and you appear to live in North Carolina, I can only suggest that you seek legal advice from a knowledgeable bankruptcy attorney near you. A good way to find one is to use the Attorney Finder provided by the National Association of Consumer Bankruptcy Attorneys. I wish you well.

Dan Nunley

Lisa February 4, 2010 at 1:51 pm

I had to file chapter 7 in October 2009. My discharge came through 1/10/10. I have a leased vehicle which I have never had a late payment on until technically tonight after midnight. The car has 3 payments left and excess mileage and wear and tear which I would be charged for upon returning the vehicle under normal circumstances leaving me upside down over $3,000.

I would like to surrender the car this weekend, but am wondering if it is too late to eliminate the charges under the bankruptcy. (did the car have to be surrendered prior to the discharge? Is there a time limit on which it has to be surrendered in order to roll into the bankruptcy?)

I held onto the car not knowing if the bankruptcy would be discharged and also, because I needed to make other arrangements for transportation for my business and family, being a single mom of three with only one vehicle.

Renee O'Dell February 4, 2010 at 6:27 pm

I started financing a vehicle in 01/09. In 03/09 I filed for bankruptcy. In 06/09 the car lot came and took the vehicle against the order of the main stay. Now it’s in the lawyer’s and the court’s hands. What type of damages am I entitled to? Also my boyfriend was joint owner and co-signer on the vehicle, and put down $2100 and traded in his personal vehicle. They have never contacted him about this matter and he is furious but doesn’t want to do something irrational. What can he do?

Dan Nunley February 5, 2010 at 11:49 am

Renee,

Since I am licensed to practice law only in Oklahoma and you appear to live in Georgia, I cannot give you legal advice. As you indicate that you have a lawyer, you should seek his or her advice regarding the damages you are entitled to and what rights your boyfriend has. I wish you well.

Dan Nunley

Dan Nunley February 5, 2010 at 11:59 am

Lisa,

Since I am licensed to practice law only in Oklahoma and you appear to live in New York, I cannot give you legal advice.

I will say that if you had been a client of mine here in Oklahoma, that I would have listed the leasing company as a secured creditor on Schedule D, as an executory contract on Schedule H, and listed your intent to either assume or reject the lease on the Statement of Intentions. Were these steps taken in your bankruptcy? If so, and if you did not sign a Reaffirmation Agreement concerning the lease, I would think that your obligation would be discharged at this point.

However, local rules and procedure vary from bankruptcy jurisdiction to bankruptcy jurisdiction. If you had an attorney representing you, I would suggest that you contact him or her. If not, seek the advice of a knowledgeable bankruptcy attorney near you. You may want to use the Attorney Finder provided by the National Association of Consumer Bankruptcy Attorneys.

I wish you well.

Dan Nunley

Melissa February 8, 2010 at 12:38 pm

My husband and I filed a motion to convert our chapter 13 to a chapter 7 in January due to my job loss. In doing so, we surrendered our vehicles since we were so upside down on both. My aunt gifted me with her older, paid for vehicle. Is that vehicle now part of my assets and can it possibly be taken from me? Our 341 meeting is scheduled for March.

Dan Nunley February 8, 2010 at 10:32 pm

Melissa,

You don’t say in which state you filed bankruptcy. I am licensed to practice law only in Oklahoma so if you live in another state, I cannot give you legal advice. And the exemption laws and local procedure vary dramatically from state to state. I would suggest that you contact a knowledgeable bankruptcy attorney near you and seek his or her advice.

If you lived in Oklahoma, I would tell you that your Chapter 7 filing date relates back to the date you filed your Chapter 13 bankruptcy. Here in Oklahoma, if you received the older car after you filed your Chapter 13 and hence your Chapter 7, it would not be property of the bankruptcy estate and therefore the trustee could make no claim against it.

Dominique February 20, 2010 at 2:13 am

Hello. I haven’t been able to find an answer for my questions so maybe you can help me. I filed a chapter 7 bankruptcy in New Mexico in November and it has since been discharged. I have a major problem concerning my car loan that I didn’t expect to run into. I received a reaffirmation agreement from my car finance company wanting me to sign the loan for 9500.00 and 24% interest. In January 2008, I purchased the car for a balance of about $13000 with a 24% interest rate and $428/mo. payment. I have paid about $4000.00+ interest alone on this loan and would like to redeem the title as the car is worth around $3,400.00 and the balance owed is about $9,500. My mom is the co-signer and I know they have her on the hook for that, but what I’m wondering is if there is a way to get the title out of the mess and maybe owe a little on an unsecured portion because of the co-signer. I mean its not like they will get more then that if they repossessed it and sold it at auction. I spoke to a women that has my account and she said that they are going to try and get $7500 or so in court, but is there anyway that I would be able to get the car for the current market value or even do a few lump sum payments within a 90 day period? I would let the car go if my mom wasn’t in the middle of this mess but it’s not her deal. Thanks for any help you are able to provide.

Dan Nunley February 20, 2010 at 11:43 am

Dominique,

As I am licensed to practice law only in Oklahoma and you live in New Mexico, I cannot give you legal advice. I will say that the redemption that you are referring to is a procedure that is available during the pendency of a Chapter 7 bankruptcy case but not after the case has been closed. If you were represented by an attorney in your bankruptcy, he or she should have discussed all of the options that were available to you including surrender, reaffirmation and redemption. If you represented yourself, that is one of the major pitfalls in that most pro se debtors don’t know the bankruptcy laws, rules and procedure as well as a bankruptcy attorney does. You may want to contact a knowledge New Mexico consumer law attorney for advice on what options you have available at this point. I wish you well.

Dan Nunley

Ashlee February 24, 2010 at 3:08 pm

My father co signed on my vehicle and I am 3 payments behind which in turn is not helping either of our credit ratings. If I file bankruptcy and I include my car loan, will it affect my father since he was the co-signer?

Thank you,
Ashlee

Sean February 28, 2010 at 3:56 pm

I am looking to file chapter 7 due to to unemployement for quite sometime. I have four cars, but only need one. Two are paid for and combined are worth about $5000.00. I would like to surrender those to go towards debts to pay down the one car I am keeping. The fourth is upsidedown and going back to the leasing company. I am able to surrender the two paid vehicles to pay down the one loan?

Josh March 2, 2010 at 5:29 pm

I will need to file chapter 7. Does it matter if I have two vehicles.

Valerie March 2, 2010 at 8:27 pm

Dan, if I have a credit union loan that I secured with my car and I still have a loan on the car but I want to keep my car and have the loan debt wiped out, am I able to do that? I live in CT – I wasn’t sure as that is “secured debt”? Thank you so much

Dan Nunley March 5, 2010 at 9:38 am

Ashlee,

As I am licensed to practice law only in Oklahoma and you appear to live in West Virgina, I cannot give you legal advice. I will say that in a hypothetical case with facts as you describe, if a person filed Chapter 7 bankruptcy, surrendered a car on which a father was a co-signor, and discharged the debt owed the finance company, the father as co-signor would be liable for the balance owed.

I would suggest that you seek legal advice from a knowledgeable bankruptcy attorney near you. You may want to use the Attorney Finder provided by the National Association of Consumer Bankruptcy Attorneys. I wish you well.

Dan Nunley

Dan Nunley March 5, 2010 at 9:51 am

Sean,

I am licensed to practice law only in Oklahoma and as it appears that you live in Illinois, I cannot give you legal advice. I will say that in a hypothetical case with similar facts as you state, if a Chapter 7 trustee administered two non-exempt vehicles, the money derived from the two vehicles would be made available to unsecured creditors and not to reduce the claim of a secured creditor. Therefore, the hypothetical client may want to consider selling the two vehicles himself and paying the proceeds to the finance company of the vehicle he intends to keep.

I would suggest that you contact a knowledgeable bankruptcy attorney near you for legal advice. You may want to use the Attorney Finder provided by the National Association of Consumer Bankruptcy Attorneys. I wish you well.

Dan Nunley

Dan Nunley March 5, 2010 at 9:58 am

Josh,

Whether it matters depends on many things such as 1) the bankruptcy exemptions available to you which vary depending on in which state you live, 2) the fair market value of the vehicles, 3) whether the vehicles have valid liens on them, etc. I would suggest that you seek legal advice from a knowledgeable bankruptcy attorney near you. You may want to use the Attorney Finder provided by the National Association of Consumer Bankruptcy Attorneys. I wish you well.

Dan Nunley

Dan Nunley March 5, 2010 at 10:10 am

Valerie,

As I am licensed to practice law only in Oklahoma and you live in Connecticut, I cannot give you legal advice.

I will say this though. If an Oklahoma resident asked me the same question, I would tell her that wouldn’t be possible. The bankruptcy code doesn’t allow debtors to discharge a debt owed on a motor vehicle and void a valid security interest and lien, whether purchase money or non-purchase money, and keep the vehicle free and clear. If the credit union has a valid lien on a vehicle, then the vehicle’s owner is going to have to pay the credit union what it is owed in order to keep the vehicle. If the vehicle is worth less than the amount owed the credit union, the owner might consider filing a Motion to Redeem which would allow her to pay off the vehicle by making a lump sum payment equal to it’s fair market value.

You need to seek legal advice from a knowledgeable bankruptcy attorney near you. The Attorney Finder provided by the National Association of Consumer Bankruptcy Attorneys may be of some assistance to you in your search. I wish you well.

Dan Nunley

Jack March 7, 2010 at 12:58 am

Hello Dan,

I will need to file Chapter 7 soon in California. Would you be able to tell me if my father listed as the MAIN borrower on my auto loan, would be generally affected by the bankruptcy if I, the CO BORROWER, filed for chapter 7? Would it even be necessary for me to document the vehicle as property in the paperwork. Also, if he managed to refinance the loan before I filed and he took me off on the new loan, could my BK be dismissed?

Thank you,

Jack

Julia March 7, 2010 at 10:33 pm

I owe 20,000 on my home valued at 95,000. I am disabled and after an ugly divorce was left with 32,000 in credit card debt. I can’t get a loan on the home to pay off credit cards because of low income and been told i cant file bankruptcy because of the equity in the home… Is that true? From Alabama

Dan Nunley March 16, 2010 at 10:46 pm

Jack,

As I am licensed to practice law only in Oklahoma and you live in California, I cannot give you legal advice. However you should be aware that if a debtor discharges a co-signed debt in bankruptcy, the co-debtor can be negatively affected. I would suggest that you contact a knowledgeable bankruptcy attorney near you for advice. You may want to use the Attorney Finder provided by the National Association of Consumer Bankruptcy Attorneys. I wish you well.

Dan Nunley

Dan Nunley March 16, 2010 at 10:51 pm

Julia,

The exemption laws that determine whether or not a bankruptcy debtor can protect the equity in his or her home vary from state to state. It would be no problem for a person filing bankruptcy and using Oklahoma exemptions to protect $75,000 equity in their homestead. Likely the exemption laws in Alabama are different from those in Oklahoma and therefore I would suggest that you contact a knowledgeable bankruptcy attorney near you for legal advice. You may want to use the Attorney Finder provided by the National Association of Consumer Bankruptcy Attorneys. I wish you well.

Dan Nunley

Phil April 19, 2010 at 5:04 pm

We filed Chapter 7 bankruptcy and had our 341 meeting and now are just awaiting the discharge in the next month or two. No creditors showed up at the 341 meeting. We are still driving our car but have not made a payment on it for five months and we are not signing a reaffimation agreement. We payed over $9000.00 in car payments over two years but still owe $20,000+ on it. Since no one from the finance company attended the 341 meeting, do we get to legally keep our car without paying the balance owed?

Dan Nunley April 20, 2010 at 10:27 am

Phil,

You shouldn’t expect to get to keep your car unless you either reaffirm, redeem or continue to make voluntary payments. Bankruptcy isn’t Santa Clause and you generally don’t get to wipe out secured debt and keep the item purchased on credit. It’s normal practice for creditors not to appear at the Meeting of Creditors (341 meeting). And while you won’t legally owe another penny on the vehicle if you don’t reaffirm the debt, the creditor doesn’t have to let you keep the vehicle if you’re not current on the payments. The creditor has two options at this point: 1) file a Motion for Relief From the Automatic Stay and get permission from the bankruptcy court to repossess the car before the bankruptcy is concluded, or 2) wait until either the automatic stay terminates by operation of law or wait until the case is closed and then repossess the car if you’re not current by then.

Dan Nunley

P Thrash April 27, 2010 at 11:49 pm

Hi Dan,
I’ve been in chapter 13 since 2005 and due to some incurred debt I’m trying to get the chapter 13 that I’m in amended due to the company I incurred the debt from has filed a lawsuit against me due . Will you advise if I should go ahead and try to amend my chapter 13 or convert to chapter 7 ? There’s also an issue with me losing my car. Do you think by converting, I would be able to keep my car. I am upside down on it. Also, I’ve been told that if I convert I can’t have more than $3000.00 in personal equity in my car to have it affirmed, is this true and can you explain what personal equity consist of in reference to my car. I live in Alabama. Thanks in advance.

Steve Richardson April 28, 2010 at 5:02 pm

I am planning on filing bankruptcy next week on all credit cards. I am wanting to keep my house and both my cars one is mine and one is my wife’s car. The cars are both in my name only. I owe 2600.00 on one and 6500.00 on the other one. Will I be able to keep the cars?

Dan Nunley April 30, 2010 at 5:08 pm

Paula,

As I am licensed to practice law only in Oklahoma, I am prohibited from giving you legal advice. I suggest that you use the Attorney Finder provided by the National Association of Bankruptcy Attorneys to find a knowledgeable bankruptcy attorney near you. I wish you well.

Dan Nunley

Dan Nunley April 30, 2010 at 5:10 pm

Steve,

As I am licensed to practice law only in Oklahoma, and it appears that you live in Kansas, I am prohibited from giving you legal advice. I suggest that you use the Attorney Finder provided by the National Association of Bankruptcy Attorneys to find a knowledgeable bankruptcy attorney near you. I wish you well.

Dan Nunley

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