Chapter 7 bankruptcy often makes many filers nervous especially when it comes to safeguarding their assets. The myth of all assets being liquidated by the bankruptcy trustee to help settle the score with lenders do happen, but it is limited to a very few cases. The most important asset that might be necessary to safeguard for a bankruptcy filer could be his/her primary car. To know more in-depth about bankruptcy log on to https://www.recoverylawgroup.com/bankruptcy/ and learn everything about bankruptcy.
How is your car loan structured?
If your car is still in debt and you want to retain the same, the fact is you will have to retain the debt associated with it as well. However, to negotiate a good deal with the lender, there are a few aspects that should be noted. Since a car loan agreement comprises of two sub-agreements that have a loan terms and conditions and an agreement to repossess the car by the lender in case of default or failure to pay, the lender holds every right to liquidate the car and settle at least some of his debt.
In this situation, during the bankruptcy chapter 7 liquidation process, the bankruptcy filer can either surrender the car to the lenders or reaffirm the debt. The first option is self-explanatory, the second one is to reaffirm the debt which means retaining the debt in the same crude format, which can be a loss deal for the bankruptcy filer as if it is an old debt, the filer might end up paying more than the car could be worth of. This is because a car is a highly depreciating asset and hence, it might be a lot less worthy even if liquidated than to reaffirm the debt. Reaffirming can be a very risky scenario and it is good to connect with top attorneys from Los Angeles & Dallas, TX before doing so. Dial 888-297-6203 to access them in a matter of minutes.
Redemption funding and redeeming the car
A car can be redeemed by a full and final settlement based on the current value of the car. The opportunity here is to retain your car by striking a negotiating deal with your car loan lender for a full and final settlement. It is more likely going to base on the liquidating value of the car and considering the car is a depreciating asset, it is more likely to be a feasible one. Considering this an opportunity many lenders have come up with specific credit that is referred to as a redemption funding.
Redemption funding can be a bit expensive, and lenders might try to exploit the debtors considering their situation and limited options. Hence, it should be dealt with, with extreme caution. Also, redemption is a process that requires a motion and approval from the bankruptcy court, hence putting a step forward under the guidance of an attorney is extremely essential. There are other ways to use exemptions, the assets can be protected and overall a beneficial situation can be made hence, every step should be taken with a lot of caution and strategically.