Going Through Chapter 7 Bankrupty And Want To Keep Your Car? There May Be Options That Can Help
Posted on: 16 August 2016
It is a common misconception that when people file for bankruptcy, regardless of what chapter, whatever vehicles they have in their possession which are not completely paid for will just be repossessed. While in some cases this may be true, it does not always have to be this way, especially if you are filing chapter 7 bankruptcy. In fact, more often than not, the person who is filing for bankruptcy can negotiate to keep their vehicle by working with the creditor and their bankruptcy lawyer through the process. Here are a few options you might want to consider to help you keep your vehicle when you are filing for bankruptcy.
Work something out to continue the loan.
Just because you are filing bankruptcy, it does not mean that there are not some things that can be discluded from the filing process. If you would prefer to keep your car, your bankruptcy lawyer can work with the lender to maintain the current loan. As long as you can continue to make your payments with this specific lender, you may not have to seek a reaffirmation agreement, which is sometimes part of chapter 7 and involves you recommitting to a specific lender.
Ask about lowering the term of the loan to fair-market value.
Some lenders provide a specialized arrangement for their borrowers who are filing bankruptcy in the form of a fair-market value assessment and loan reconfiguration. What this basically means is, the lender will reassess the value of the vehicle and adjusts the amount owed according to the current fair-market value. This can be helpful if you have just purchased a car and the value has dropped a considerable amount, which would make paying on the previous value illogical. If the lender does offer fair-market value reconfiguration on the loan, you may see lower payments that will be easier to afford.
Consider a cash buyout option.
Most lenders will accept a cash settlement for a car that they have financed if the borrower is in a financial burden or in the process of filing bankruptcy. Many would rather accept a certain cash settlement for the vehicle than to deal with the whole process of repossession and selling the car, which is often costly to the lender. Cash settlements for your car will mean you have to come up with the set amount set forth by the lender, but if you can do so, the car will be yours.
If you are going through bankruptcy but need to keep your vehicle, contact a bankruptcy lawyer like those at O'Connor Mikita & Davidson LLC to guide you in one of the directions listed above.
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