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Chapter 7 Bankruptcy and Chapter 13 Bankruptcy Lawyers
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Whether or not you will lose your car depends in part upon whether you file for bankruptcy under Chapter 7 Bankruptcy or Chapter 13 Bankruptcy. Under the terms of Chapter 7 Bankruptcy, unsecured debt related to credit cards and certain kinds of loans can be eliminated. However, in doing so, the court will first liquidate certain kinds of property in order to pay creditors a percentage of what you owe them. This may include your car or it may not - it all depends on the debt involved, what property is considered a "luxury item," and whether you can afford to continue making payments on a car loan. In almost every case you will be able to keep your car if you choose to do so.
It's more likely that you can keep your car if you file for Chapter 13 bankruptcy since Chapter 13 Bankruptcy is essentially a repayment of part of your debt instead of an elimination of it. Since a repayment schedule is part of filing for Chapter 13 Bankruptcy, you may be able to negotiate a repayment plan with the bank that holds your car loan. However, whether you can file under Chapter 7 Bankruptcy Bankruptcy or Chapter 13 Bankruptcy will depend on your income and financial situation.
Your bankruptcy attorney can evaluate your situation and discuss the options available to you. If you qualify for Chapter 7 Bankruptcy, we can explain how you can keep your car without necessarily going further into debt. If you qualify for Chapter 13 Bankruptcy, our lawyers can include your car loan as part of your proposed repayment plan to creditors. To schedule a free consultation, call 602-GOT-DEBT or click here to send an email today.
How Can I Keep My Car Under the Terms of Chapter 7 Bankruptcy?
Chapter 7 Bankruptcy is not intended as a means for restructuring personal debt; rather, it is intended to discharge certain kinds of unsecured debt like credit cards, bills, and different kinds of loans. As a result, the court is more interested in determining what assets you have available that are not exempt. Most assets you need will be exempt. If you have recently bought items like a sail boat, plasma TV, or an expensive espresso machine, the court may liquidate them in order to pay off creditors. But what if you own a luxury car?
A great deal will depend on whether you can afford continuing making payments on a car loan and whether the car in question is "necessary." If you drive a $80,000 Mercedes and can barely make payments on it, the court might question your ability to keep the car. If you can afford making payments you can likely keep your car. If, however, your creditors would be better served by your selling the $80,000 car and buying a cheaper model or a used car, you may be forced to sell it. This is considering the exemptions available. In Arizona, each filing adult gets to use $5000 auto exemption. The amount of equity you have in your car will determine if the trustee allows you to keep it. If you have substantial equity, you will have to pay a portion of that equity to the trustee.
How Can I Keep My Car Under the Terms of Chapter 13 Bankruptcy?
It's easy to keep your car under the term of Chapter 13 bankruptcy since it involves a reorganization of personal debt. You will either be able to pay what you owe on the car or the value of the car if you have owned it over 30 months. Typically, persons filing for bankruptcy under Chapter 13 are given 3 to 5 years to pay back a portion of their debt. Usually, this involves paying back a small percentage of what is owed. In order to file for Chapter 13, however, you need to be gainfully employed and have at least some disposable income to make the payments. However, as in Chapter 7 Bankruptcy, you cannot simply discharge the debt owed on a car - you must continue making some kind of payment if you choose to keep your car.
Need Information? Contact Your Local Bankruptcy Attorney throughout Arizona including Phoenix, Mesa, Chandler, and Glendale as well as Las Vegas, Nevada.
As sponsoring attorneys who practice exclusively in the area of bankruptcy, your bankruptcy lawyer understands how to help you create a financial plan that allows you to file for bankruptcy and keep your car. If you have questions about filing under Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, call 602-GOT-DEBT or click here to send an email and schedule a free consultation face to face with your bankruptcy lawyer.
