Protecting Your Car When You File For Chapter 7 Bankruptcy Protection
If you face insurmountable debt, you can seek to permanently discharge that debt by filing for protection under Chapter 7. The bankruptcy laws limit the type of debt that can be discharged, and also allow you to reaffirm the debt on any property that you want to exempt from the bankruptcy sale. If you own a motor vehicle and don’t want to lose it in bankruptcy, there are specific steps you can take to protect your property.
Reaffirming Your Car Loan in a Chapter 7 Proceeding
A reaffirmation is essentially a new agreement to repay the amount owed on your vehicle. To reaffirm a car loan, you will be required to sign an agreement, stating that in exchange for keeping your car you agree to continue to make the payments on the car. The bankruptcy court will review the proposed reaffirmation to make certain that you need to have the car, that the payment is reasonable and that having the car payment will not impose an unreasonable hardship on you and your family. You can also rescind a reaffirmation agreement within 60 days and return the vehicle without any further obligation.
You want to be careful about entering into a reaffirmation agreement. By doing so, you are essentially agreeing that the protections of the bankruptcy laws do not apply to the car. If you include the car in a bankruptcy filing, you are protected by the automatic stay and the lender cannot call, write or take legal action to collect car payments from you, other than through the bankruptcy court. If, however, you reaffirm your car loan and you fall behind on your payments, the lender is not affected by the automatic stay and you will be liable for the entire unpaid amount of the loan.
Contact Neuner & Ventura, LLP
Let us help you take back control of your life! We understand the stress, anxiety and confusion that can be associated with a potential bankruptcy filing. We offer a free initial consultation to every new potential bankruptcy client. (We do, however, reserve the right to charge a fee to review any work done by another attorney). For an appointment, call Neuner & Ventura at (856) 596-2828 or send us an e-mail. Evening and weekend appointments are available upon request
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