At an appointment with a bankruptcy attorney at Halcomb Singler, LLP, at an initial meeting regarding potential debt settlement or bankruptcy we always discuss the assets of the potential client along with their general debt load, income and expenses. By gaining this information our bankruptcy attorney is able to advise whether bankruptcy might be a good option for the potential client and, if bankruptcy is a good option, whether Chapter 7 or Chapter 13 would be more beneficial.
If there is one thing that is terrifying to people who are struggling with debt, it is the idea of losing a vehicle. Of course, their vehicle is their means to get to work and continue to earn money, so that makes perfect sense. In addition, the idea of having to go to a car dealership and have their credit pulled is often not a pleasant thought. While each case is different and each person needs to speak to a bankruptcy attorney in their area about their case, most people do not lose a car that they want to keep in bankruptcy. This is true whether it is Chapter 7 or Chapter 13 bankruptcy.
Many potential clients simply tell us that they don’t want to list their car loan in a bankruptcy. Well, if you decide to file bankruptcy you don’t have the option to leave any creditors out of your petition. You must include your car loans and all other debt. However, that does not mean that you cannot keep your car. In fact, if you are filing a Chapter 13 bankruptcy and purchased your car more than 2 1/2 years prior to the filing of the bankruptcy, you may be able to repay less than you currently owe on your vehicle (but we will leave that for another blog posting).
In a Chapter 7 bankruptcy, a bankruptcy debtor can keep his or her car by reaffirming on the debt. Reaffirming means executing a contract with the lender that restates the amount owed, the type of vehicle and is signed by the debtor agreeing to continue to be liable for the car after bankruptcy. Reaffirming allows a person to keep their vehicle and to continue making the payments as agreed for the remainder of the repayment term and then owning the car outright. Reaffirmation also means that if you get behind on the payments post-bankruptcy and the lender repossesses and sells the car that you will be liable for the deficiency balance.
In a Chapter 13 bankruptcy you may pay your loan directly to the creditor or pay the trustee who, in turn, repays your vehicle lender according to the terms of your Chapter 13 repayment plan.
Even though it is likely that you will be able to keep your car in bankruptcy, that does not always mean that it is a good idea to keep a car. Bankruptcy allows individuals and married couples to get a fresh start and if your car was a bad investment it might be time to consider giving it up. Your bankruptcy attorney can speak to you regarding the pros and cons of keeping a vehicle post-bankruptcy.
If you live in the Indianapolis area and would like to meet with a Halcomb Singler bankruptcy attorney at our Carmel, Indiana office call (317) 575-8222 or click here. At Halcomb Singler we offer one free consultation for those considering bankruptcy with an attorney experienced in Indiana bankruptcy law. If you would like to schedule your no-pressure, judgment-free appointment call today!