Article By Patrick Mansfield | Best Rated Law Firms | 02/23/2023

Article Summary

If you are considering filing Chapter 7 bankruptcy, one of the main questions you might have is if you can keep your car after filing. This article will explain how Chapter 7 bankruptcy works, what kinds of cars you can keep in a Chapter 7 bankruptcy, and how to keep your vehicle during and after the filing process.

Can You Keep Your Car After Filing Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is a form of debt relief provided by the government for individuals who cannot pay back their creditors. In this type of bankruptcy, some or all of a person's assets may be sold to help pay down their debts. One such asset is a car—so it stands to reason that if you file Chapter 7 bankruptcy, you could lose your vehicle during the process.

However, this doesn’t mean that filing for bankruptcy will always result in losing your car. Depending on your state laws and the value of the car, it is possible to protect your vehicle from liquidation during Chapter 7 bankruptcy proceedings.

Which Cars Can Be Kept After Bankruptcy?

In order for a car to be exempt from being taken in a Chapter 7 bankruptcy proceeding, it must fall within certain federal or state exemptions limits. Generally speaking, vehicles worth $4,000 or less (or up to $6,000 in some states) can be exempted fully from being taken in order to repay creditors. If the value of your car exceeds this limit but still falls below certain threshold amounts set by state law (sometimes up to $13,450), they may be partially or subjectively exempt—meaning that some or most of the proceeds raised through selling off their vehicles will go to their creditors instead.

Keep Your Car Through Reaffirmation Agreements

Another way to keep your vehicle throughout repaying past debts with a pre-existing loan is through reaffirmation agreements. A reaffirmation agreement allows individuals who file for personal bankruptcies such as chapters 7 and 13 -to re-establish their right as borrowers on a loan and continue making payments on pre-existing rate without penalty fees or charges beyond those outlined in their contract originally. However, these agreements do not absolve debtors from paying out any other non-personal loans previously established with other lenders prior again new payment arrangements would need negotiated independently outside existing contracts.

Keep Your Car With Personal Property Exemptions

Lastly another option available consumer bankruptcies are personal property exemptions which allowed debtor declare certain items legally untouchable liquidators searching through possessions paid owed creditors . These protections apply all motor vehicles so long list meet total requirements under specific statutes states letting people retain primary automobiles life goes unwaveringly despite circumstance financial troubles we find ourselves faced difficult times .

Conclusion

Filing for Chapter 7 Bankruptcy doesn’t always mean giving up everything that matters including our cars – with careful consideration understanding stipulations in federal and state law, there ways various forms legal recourse use when comes protecting your vehicle in a Chapter 7 bankruptcy filing.