There are 2 ways that a person would not be able to keep their car and frankly the answer is almost always yes. You can keep your car in a bankruptcy, through a bankruptcy an after a bankruptcy. The two reasons that a person wouldn’t be able to keep their car is if the car was tremendously valuable and had no loan or no lease or no payments on it. So if you own a $100,000 car that was paid off and it was a substantial asset and the bankruptcy trustee saw that as an asset and thought I’m going to liquidate this asset and use the money to pay creditors with it, that’s one scenario where you may not keep the car because the car has so much value and it’s much more valuable than the exemption that you may get in California, then the trustee may sell the car.
That’s not the case for most people. Most people however have the car financed or they are in a lease. In those situations, you don’t really have that much equity. The other situation is where the loan is equal to the value of the car. In those situations whether it’s a lease or a financed car, you are going to keep the car as long as you continue to make payments and stay current on the payments. The car finance company would also be a problem if you weren’t making payments on the car. So if you were tremendously behind on payments, 60, 90, 120 days behind on payments, they could repo the car not because of your bankruptcy per se but because you were so far behind on payments.
Just because you file bankruptcy, the finance company cannot then say that, “You filed bankruptcy, we are going to come and pick up the car.” It doesn’t work that way. That’s illegal. If you are current on the car payment and the lender or the finance company or the lease company is accepting your payment every month, you are going to be able to keep the car without too much trouble. Obviously have a bankruptcy attorney do the forms for you so nothing gets screwed up but essentially you are going to put your intention in the case in one of the forms that says your intention is to keep the car.
You may be asked to reaffirm that after the bankruptcy meaning sign a separate a separate agreement agreeing that you are going to make payments on the car continuously or up till it’s paid off after the bankruptcy in order to keep the collateral but you should be able to keep the car without any trouble unless you fall behind in which case they would still be able to repo it but that would be the case whether there would be a bankruptcy involved or not. So to summarize, can you keep your car in bankruptcy? Yes. Most people keep their car in a bankruptcy without any trouble other than the two exceptions that I mentioned. You have a tremendous amount of equity or it’s a big asset or you are way behind on your car payments and the finance company is going to repo the car either way.
For more information on Keeping A Car In Bankruptcy, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (888) 728-0044 today.