It is possible to save your car by filing for Chapter 7 bankruptcy but only under certain circumstances. In a Chapter 7 bankruptcy, there are only three options available to debtors in order to decide what they want to do with their personal property which is covered under a lien. Once you make up your mind under the guidance of your bankruptcy lawyer, the lawyer will file for ‘Statement of Intention’ in the bankruptcy court which will tell everyone your intentions regarding your secured collateral.
The following can be your options:
Surrendering your property to a car lender to completely satisfy the debt can be your first option. Normally, if your debt is $10,000 on a repossessed car, and the lender is able to incur only $7000 for it at an auction, the car lender can come after you for the remaining $3000 that you owe. However, in a chapter 7 bankruptcy, your personal liabilities on your debts are wiped out, and thus the lender cannot sue you for the deficiency.
Another way to keep your car safe in a Chapter 7 bankruptcy is the reaffirmation of the underlying note. A reaffirmation agreement is voluntarily signed between a creditor and a debtor and states that the underlying note cannot be discharged in bankruptcy. This means that you are agreeing on the survival of your debt obligation even in bankruptcy. Thus, if you fail to repay the debt even after three months of receiving your discharge order, the creditor can sue you for the difference in money that you owe and that the car sells for.
One more way to keep your car with you is to pay the fair market value of the car to the lender in lump sum cash. If the worth of your car is $6000 and you owe $10,000 on it, make the complete payment of $6000 in cash to your lender.
It is always better to consult a bankruptcy lawyer before making any decisions regarding bankruptcy. You can contact The Recovery Law Group, the best bankruptcy attorneys of Los Angeles & Dallas, TX, by visiting www.recoverylawgroup.com or calling at 888-297-6203.