What to do if I filed for Chapter 7 but would like to keep my car?
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What to do if I filed for Chapter 7 but would like to keep my car?
I owe $7100 and it is only worth $5100. If I have faithfully been making payments and want to continue keeping the car, how do I go about doing that? I could not file it under exemptions because it did not qualify. I am pro se.
Asked on March 14, 2013 under Bankruptcy Law, Idaho
Answers:
M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney
Answered 11 years ago | Contributor
Usually the answer is yes but there are many factors that affect whether or not a person can keep their car. For example, how much the car is worth, how much is owed on the loan and how far behind they are on the payments?
Basically, in such a situation you have 3 options:
- You can “surrender’ (i.e. give back) your car and just walk away;
- You can “redeem” the car. This is the process of buying your car back from the lender for the fair market value (i.e. for what the vehicle is really worth as opposed to what you owe). However, redemption requires a lump sum payment; or
- You can “reaffirm” the loan. This means that the bankruptcy will not discharge (i.e. wipe-out the loan). You would still owe that money and if you failed to pay as agreed the lender could then sue you. Additionally, in order to reaffirm your loan, you will need to be current with your payments and be able show that you can make the payments.
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