Filing for bankruptcy is, in effect, making a public declaration that you are unable to repay debts. It is legally imposed and opens a door of opportunity for creditors to file a claim on your assets to cover the total cost of the debts incurred by you. If approved, a trustee will be appointed by the court to discharge the service of liquidating non-exempt assets that you may own. One asset that is non-exempt is your car.
Can I keep my car if I file for bankruptcy?
Depending on the state you live in and the type of bankruptcy you file keeping your car may be an option. You will be required by law, once you have filed for bankruptcy, to disclose all assets. Non-exempt items include anything not necessary for you to live and work. These include any investments such as stocks, bonds and policies. Additional properties, jewelry and clothing that can fetch a pretty penny. Your car is typically not exempt from this process. It depends on the model and equity of your vehicle. The trustee appointed to your case is the one that would make the final decision regarding any property you have listed on your disclosure form, including your car. Here are a few options:
1. If you can find a way to come up with the money to cover the cost of your vehicle, you can approach the trustee and offer to buy back your car and use the cash to cover your debt in place of it. It rests solely upon the trustee appointed to decide if they would allow you to utilize this option.
2. You can alternatively broker an exchange where you trade an exempted item or items of equal value for your non-exempt vehicle. In such an instance, the trustee may allow you to keep your car and use the money from the sale of the traded item to repay your debt.
3. If you have equity in your car that does not exceed the state’s limit or if the value of your car is less than what you owe, keeping it is a possibility.
4. If you have not yet filed for bankruptcy, or don’t plan to, it may be a better option to sell your assets yourself to ensure you retain control over your vehicle.
It is possible to keep your car after filing for bankruptcy, but circumstances differ from one case to another. If you are drowning in debt, seeking bankruptcy, and keeping your car is a priority, it is important to speak with an experienced bankruptcy attorney.
The bankruptcy attorneys at Border Law Southfield MI special in Chapter 7, Chapter 11, and Chapter 13 bankruptcy. As a trusted consumer debt law firm with over 15 years’ experience, Border Law has helped their clients get the fresh financial start they deserve. Call us today for a Free Case Evaluation and to learn more about your debt relief options!