Before you file for bankruptcy, you need to find out if you will, or will not get to keep your car. This decision is dependent on several factors.
1) Is it possible that a Bankruptcy Trustee can sell my car?
Yes, it is quite possible. When a chapter 7 Bankruptcy is filed, you are assigned a Bankruptcy Trustee, whose work is to see what all assets you hold, and how can he arrange them to make sure your creditors are paid. It may also include selling your car.
2) You can protect certain Assets (also your Car) from the Bankruptcy Trustee
The main reason a person files for Chapter 7 Bankruptcy, is to get a fresh start and rid of all current debts. Keeping that in mind, the bankruptcy code allows you to keep certain documents from the trustee. These properties that you can protect from the Bankruptcy Trustee are called ‘exemptions’.
3) Is my car protected through Bankruptcy Exemptions?
Through Chapter 7 Bankruptcy, a certain amount of Equity in your car may be protected.
This amount depends on the state where you file for bankruptcy, and whether you elect federal or state exemptions, depending on if your state has that option. If the equity in your car is less than your Exemption, the trustee will not sell your car. However, if more, the trustee can still sell your car and pay off your debts.
4) How is Equity in a car determined?
The amount of interest on the car on the day you file for Bankruptcy is equal to the equity in the car you own.
5) What if my car is financed?
If the Money to own your car is borrowed, and not your own, then the amount of equity in your car is equal to the value of the car less the amount you owe to pay off the loan.
6) What happens when Bankruptcy Exemptions are not enough to protect my car?
If the leftover amount after the exemption is relatively small, the trustee may abandon his interest in your car. This is depending on the equity amount above the exemption amount. The reason for this is, the trustee will also have to incur some expenses to sell off your car, so if the total of the cost of selling and the exemption amount will not help repay the creditors, the trustee will not want to sell off your car.
7) Is it possible for my lender or finance company to repossess my car even after being protected from the trustee?
A secured creditor is entitled to get paid back in full or get back its collateral. Any creditor who has a lien on your property is Known as a secured creditor. Car financing companies and mortgage companies are examples of secured Creditors. So even if through Chapter 7 Bankruptcy most of your unsecured payment is waived off, a secured creditor can repossess your Car.
Remember, choosing the right Attorney is of utmost importance, as only the right Attorney will be able to guide you correctly. You can also contact Recovery Law Group from Los Angeles & Dallas, TX for the Same. Contact – (888-297-6203).