Will my car be repossessed due to filing bankruptcy?
You need not lose your car if you are filing a Chapter 7 bankruptcy and getting a discharge of debts. If you are not keeping your home, you are allowed a car worth up to $3,450.00 using federal law exemptions. If you have more equity in your car, you might be allowed additional amounts unused under the wildcard exemption ($11,975.00 per filer). If you are keeping your home, you are allowed a car worth up to $700.00 using state law exemptions. Your spouse in a joint petition is also allowed the same amount for their vehicle. If there is a loan on the car, you would be allowed to keep the loan out of bankruptcy by reaffirming the debt. The bank will have you sign a reaffirmation agreement that even though you filed bankruptcy, you still wish to keep the car and continue paying the loan. As long as you have enough income before other expenses to make these payments, the reaffirmation agreement would be approved by the court. On the other hand, if you cannot afford your car loan, having your car repossessed and putting the loan into a Chapter 7 bankruptcy allows you to not be responsible for any loan balance still owed after resale of the vehicle.
This is not legal advice. It is just general information on filing bankruptcy. Please see a lawyer in your area if you have questions regarding your specific situation.
