QUESTION
Is there a way to keep my two cars after bankruptcy?
Asked on Nov 03rd, 2014 on Bankruptcy - New York
More details to this question:
I am seriously considering filing for Chapter 7. I am a single full time parent, so we are a household of 2. I have 2 cars, one I just bought last year, I still owe about $40,000 on it, the wholesale value on it is now only $26,000 (I am behind on payments, I have the cash to get caught up, but the bank doesn't seem to be willing to accept it, if it get's repossessed, I will replace it using a sub prime car lot). The other car I paid off years ago. The one that is paid off is for my 16 year old son, who is just getting his temps. It is not road worthy at the moment and worth maybe $1,000 if I don't repair it, it will likely be replaced with a cheap $2,000 car (which I may finance sub prime, or pay cash, depending on how it effects my filing ) Will I be able to keep both cars? I may not pass the means test (I make well above the median), in which case I'll be looking at a chapter 13 instead. Same question for a chapter 13, will I be able to keep both vehicles? I will be trying to talk to an attorney this week - I'm just trying to get my head around everything.
5 ANSWERS
Bankruptcy Law Attorney serving Austin, TX
at
Law Office of Susan G. Taylor
Update Your Profile
That would be a yes.
Answered on Aug 31st, 2015 at 8:38 PM
In order to keep both cars in a Chapter 7 bankruptcy, you have to be able to pay for the one that is financed according to the contact terms and be able to exempt any equity in both cars. Chapter 7 isn't designed to let you make payment arrangements to bring your vehicle payments current & lenders have no obligation no incentive to work with you. Since there is no equity in the vehicle that is financed, from a financial standpoint, you are making an unwise decision in attempting to keep this vehicle. The world is full of cars that you actually can afford & you should be realistic about your motor vehicle expense.
Answered on Nov 04th, 2014 at 2:53 PM
By all means, speak with an experienced attorney. Look at all your options. If you can qualify for a Chapter 7, look at a 722 Redemption. This is too complicated to explain here. Also ask the attorney about a "cram down" option in a Chapter 13. But keeping both cars should work. Best of luck!
Answered on Nov 04th, 2014 at 11:53 AM
If you are "well above the median" then it is quite likely that you will be forced into a chapter 13. The car you are financing is not worth what you owe, but if you just bought it last year, you will have to get current on the payments through the chapter 13 plan or surrender it and take your chances on buying another one while you are in bankruptcy. The trustee will question whether your 16 year old son really needs a car, but if you really want to keep it, you should repair or replace it before filing for bankruptcy and don't finance the replacement, since the trustee could void the recent indebtedness. Depending on the amount of your unsecured debt, bankruptcy may or may not be the best option for you. Most bankruptcy attorneys (like me) offer a free consultation to help you decide the best way to get your debt under control.
Answered on Nov 04th, 2014 at 11:07 AM
You do it through a reaffirmation agreement.
Answered on Nov 04th, 2014 at 8:55 AM