subject: Will I Have To Give Up My Car In A Chapter 7? [print this page] If you've begun your Chapter 7 bankruptcy, you are probably already reaping the benefits. You've said goodbye to creditor calls, wage garnishments, and threats of repossession and foreclosure...but is it time to say goodbye to your car too? If you've retained a great attorney, his or her number one job is to protect your property--but it requires some commitment from you.
It all starts with the statement of intention. This document tells the court and your creditors what you plan to do with any property that is serving as collateral on a loan (like a car). You have three options for the fate of your property. You can reaffirm the debt, redeem the property, or surrender the property. Two of those options allow you to keep your car.
To reaffirm the debt, you sign a reaffirmation agreement, which states that you will continue to make payments under the original terms of contract and, in exchange, you get to keep the property. For many debtors, this seems to be the best option. A Chapter 7 can help you make it possible to keep up on payments you could not keep up on before by eliminating your unsecured debts like credit cards and medical bills. It won't be as hard to commit to paying your debt under the same terms if you aren't dealing with other debts weighing down your budget.
You can also choose to redeem the property. This involves paying the creditor one lump sum for the market value of the property instead of what you owe for it. For instance, if you owe $9,000 on your car but it is only valued at $7,500, you can pay the lender $7,500 in one lump sum and keep the car. As you may have guessed, this option can be very appealing for someone who is upside down on their loan.
You can also choose to surrender the property to the creditor. Is this option really appealing to anyone? Occasionally, you may decide that keeping the car and continuing to make payments would actually be a detriment to your budget. Though you may love your car, if you cannot afford the payments, you must be honest with yourself. bankruptcy can be quite a blessingbut you still may have to make some tough choices to get the best outcome for yourself.
To learn more about Chapter 7 bankruptcy and the new life it could provide for you, look for free information from reputable attorneys in your area.
