If you’re struggling to make ends meet, you may be thinking about going through a Chapter 7 bankruptcy. Some people worry that doing so will mean that they have to liquidate everything they own, but the reality is that giving up everything is unlikely.
It is possible that you can protect your vehicle and keep it even if you go through bankruptcy. Exemptions are usually available that allow you to keep a vehicle up to a certain value, which may be something that can help you during bankruptcy.
What kind of debt is a car loan?
A car loan is a secured debt, so if you can’t make payments, you could risk losing your vehicle. However, if you reaffirm the loan and can make the payments on time, you may be able to keep it.
You may be able to renegotiate the terms of the loan with your lender. There is also the potential to redeem the car loan with a new lender, which could help you reduce your balance. If you want to redeem the loan and have what you owe reduced, that is something that the bankruptcy court will need to agree on. You can apply for a new loan, file a motion with the offer and ask for approval from the judge if this is something that you want to do.
Your attorney can talk with you more about protecting your assets if you’re going through bankruptcy. Our website has more on what you can do to keep your car and other assets if you choose to file Chapter 7 bankruptcy. It may be possible to keep your vehicle with the right support.