Open navigation Main Menu Mortgages
refinancing your existing loan Finding the right lender Additional Resources
Looking for a financial advisor? Try our three minute test and match to an adviser today.
Main Menu Banking
Compare Accounts Use calculators Get assistance from Bank reviews
Looking for a financial advisor? Take our 3 minute quiz and match to an adviser today.
Main Menu Credit cards
Compare by category Compare using credit Compare by issuer Get help
You’re looking for the ideal credit card? You can narrow your search using CardMatch(tm)
Main Menu Loans
Personal Auto Loans and Loans for Students Loan calculators
Find the perfect personal loan within 2 minutes or less Answer some questions to be offered loans, with no impact on your credit score.
Main Menu for Investing
Top of the Brokerages, and robo-advisors . Learn the basics Additional resources
Looking for a financial advisor? Do our 3-minute quiz and connect to an adviser today.
Main Menu Home equity
Find the most competitive rates Lender reviews. Use calculators. Knowledge base
Looking for a financial advisor? Take our 3 minute quiz and then match up to an adviser today.
Main Menu Real estate
Selling a home Buying homes Finding the right agent Additional resources
Looking for a financial advisor? Try our three minute test and match to an adviser today.
Main Menu Insurance
Car Insurance Homeowners insurance Other insurance reviews of the company
Looking for a financial advisor? Take our 3 minute quiz and match the advisor you want today.
Main Menu Retirement
Retirement accounts and retirement plans Learn the basics Retirement calculators Additional Resources
Looking for a financial advisor? Try our three minute test and match the advisor you want today.
Open search Close search
Submit
How to file for bankruptcy and keep your car Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial decisions by offering you interactive tools and financial calculators as well as publishing informative and trustworthy content. This allows users to conduct research and compare information for free and help you make sound financial decisions. Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The products that appear on this website are provided by companies that pay us. This compensation may impact how and where products are displayed on this website, for example the order in which they may be listed within the categories of listing, except where prohibited by law. This applies to our mortgage, home equity and other home loan products. This compensation, however, does not influence the information we provide, or the reviews that you see on this site. We do not contain the universe of companies or financial deals that may be accessible to you.
SHARE:
Tetra Images/Getty Images
5 min read Published March 20, 2023
Written by Mia Taylor Written by Contributing Writer
Mia Taylor is a contributor to Bankrate and an award-winning journalist who has two decades of experience and worked as a staff reporter or contributor for some of the nation’s leading newspapers and websites including The Atlanta Journal-Constitution, the San Diego Union-Tribune, TheStreet, MSN and Credit.com.
Edited by Rhys Subitch Edited by Auto loans editor
Rhys has been writing and editing for Bankrate since the end of 2021. They are dedicated to helping readers gain confidence to control their finances by providing clear, well-researched information that breaks down complicated topics into manageable bites.
The promise of the Bankrate promise
More details
At Bankrate we aim to help you make better financial choices. While we are committed to strict journalistic integrity ,
This article may include the mention of products made by our partners. Here’s an explanation for how we make money .
The Bankrate promise
In 1976, Bankrate was founded. Bankrate has a long track history of helping people make informed financial decisions.
We’ve maintained this reputation for over four decades by demystifying the financial decision-making
process and giving customers confidence in which actions to take next. Bankrate follows a strict ,
You can rest assured you can trust us to put your needs first. Our content is written with and edited ,
They ensure that what we write will ensure that our content is reliable, honest and reliable. Our loans editors and reporters focus on the things that consumers care about the most — the different types of lending options, the best rates, the most reliable lenders, ways to repay debt, and much more. So you can feel confident when investing your money.
Editorial integrity
Bankrate has a strict policy and rigorous policy, so you can rest assured that we’ll put your needs first. Our award-winning editors and reporters provide honest and trustworthy content that will assist you in making the right financial decisions. The key principles We value your trust. Our mission is to offer readers accurate and unbiased information. We have standards for editorial content in place to ensure that happens. Our reporters and editors thoroughly check the accuracy of editorial content to ensure that the information you’re reading is correct. We keep a barrier with our advertising partners and the editorial team. The editorial team of Editorial Independence Bankrate does not receive compensation directly by our advertising partners. Editorial Independence Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to provide you the most accurate advice to aid you in making informed personal finance decisions. We follow strict guidelines to ensure that our editorial content isn’t influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is verified to guarantee its accuracy. Therefore, whether you’re looking at an article or review, you can trust that you’re getting reliable and reliable information.
How can we earn money?
You have money questions. Bankrate has the answers. Our experts have helped you understand your money for over four decades. We are constantly striving to provide our readers with the professional guidance and tools required to be successful throughout their financial journey. Bankrate follows a strict policy, which means you can trust that our information is trustworthy and reliable. Our award-winning editors, reporters and editors create honest and accurate information to assist you in making the right financial choices. Our content produced by our editorial team is factual, accurate, and not influenced through our sponsors. We’re open about how we are capable of bringing high-quality content, competitive rates and useful tools for our customers by revealing how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for placement of sponsored products and, services, or when you click on certain links posted on our website. This compensation could impact how, where and when the products are listed within categories, with the exception of those it is prohibited by law regarding our mortgages, home equity, and other home loan products. Other factors, like our own proprietary website rules and whether a product is available within the area you reside in or is within your own personal credit score can also impact how and when products are featured on this site. Although we try to offer the most diverse selection of products, Bankrate does not include information about every credit or financial product or service.
If you’re thinking of doing so alternatives, there are some to help keep your car from being taken away even if aren’t able to fully repay your auto loan. In several states, you could be able avoid repossession of your vehicle through bankruptcy code exemptions, though the laws differ between states. Can you protect your car by filing bankruptcy?
Both Chapter 7 and Chapter 13 bankruptcy include provisions through which you may be able to keep a vehicle that you bought with secured loan.
How to keep your car by filing Chapter 7 bankruptcy Car loans are , meaning the car is used as collateral to secure the loan. Since the car is used as collateral, it can be taken by the lender if you fail to keep up with the payments. However under Chapter 7, the most well-known bankruptcy for people there are a variety of alternatives to keep your car. “To maintain a car when you go through Chapter 7, the debtor must be current and in good standing with their lender or perform a’redemption that involves making payments to the lender or executing a ‘reaffirmation,’ which may require altering the loan terms, but this will require lender permission,” says Lamar Hawkins, a bankruptcy attorney with Guidant Law. Here’s how redemption and reaffirmation are done: Redemption: Obtaining redemption is a way to pay your creditors the vehicle’s current reasonable market value. If you can afford to do this, it may make life simpler in the future since you’ll no longer have to pay for car loans. However, because the majority of people file bankruptcy during a time when cash isn’t readily available it’s not a viable option. Reaffirm: This option permits you to continue to pay on your loan until you file for bankruptcy. By reaffirming your debt you sign a new agreement to continue making payments according to a schedule set by you and your creditor and may also include revised loan terms. Tips from Bankrate
If neither of these options is a good fit for your financial situation You can also give your car to the creditor and have the debt discharged.
“When you are granted a Chapter 7 Discharge, you won’t have any personal obligation to pay your loan,” says Pennsylvania-based bankruptcy lawyer Dai Rosenblum. “All the creditor can do is take their collateralthat is, your vehicle. They are not able to pursue you for cash.” Exemptions from bankruptcy you file in Chapter 7, your assets are sold or liquidated to pay your creditors. But a bankruptcy court allows you to keep a certain amount of your property up to a certain amount of money, as per Debt.org. This is known as”exemption. “exemption.” The maximum federal exemption is $4,000. However, some states set their own limit that must be followed Some states’ exemptions exceed more than $4,000 and some are lower. The value of your vehicle when you file bankruptcy is not based on what the price you spent on it. In most states, value is determined by the value of the car’s cash value determined by factors like the year, model, and mileage. Car industry sources like Kelley Blue Book or Edmunds could be used to determine the value of your car. If your car’s current value is found to be lower than the state’s exemption limits, then you’ll be permitted to keep the car even while you’re filing bankruptcy. On the other hand in the event that the car is valued higher than the exemption, the bankruptcy trustee could decide to offer the car for sale to help you pay off your creditors. The way it works is If the state’s exemption is $4,000, and your vehicle’s worth is $2,000, then you’ll likely be able to keep the vehicle since it’s value is less that the amount of exemption. If however the exemption for your state is $4,000, and your car is worth $10,000, the bankruptcy trustee could take the car off the market and utilize the profits to pay off debt. There are a variety of reasons why you should not keep your car during Chapter 7 bankruptcy Keeping your car may not always be feasible when you file Chapter 7 bankruptcy. Sometimes, it does not make financial sense to hang on to your car. In the process of deciding on these issues, the value of your car and your equity in the car will play an important role. Equity in the car and bankruptcy similar to a mortgage for a home equity is determined by subtracting the remaining amount owe on the loan from the car’s present market value. “For example, if you own a vehicle with an appraised value of $10,000 and the $1,000 loan amount, you’ll have $9,000 equity,” says Rosenblum. In the event that your equity amount is more than the exemption the bankruptcy trustee can choose to sell the car and use the proceeds towards the repayment of your debts. It’s not financially sensible for you to hold on to the car.. Finally consider keeping to your mind your vehicle’s value at the moment is on the car loan, then keeping the car will not be a good financial choice. “Very often there is a situation where the loan balance is greater that the worth of the car and, if there is no way or desire to keep the car, the bankruptcy filer will let go of the vehicle,” says Michael Sullivan, a personal financial consultant of the non-profit financial counseling firm Take Charge America. How to save your car through Chapter 13 bankruptcy Chapter 13 bankruptcy offers a variety of options for keeping your car. “The Chapter 7 framework is the basis for Chapter 13,” says Rosenblum. “But with Chapter 13, you reorganize your debt.” Making an installment plan as an element of Chapter 13 debt reorganization, the three-to-five-year repayment plan will be developed that factors in your income and assets. The purpose for the Chapter 13 process is to allow you to retain your possessions, which includes your car, while paying the debt. In addition, if you’re late on your payments, the process will need you to catch up and pay your debt on time going forward. Revision of the conditions for your loan The court may also demand that the lender revise the car loan terms, including lowering the interest rate, which is another way to help you keep the vehicle. If the terms are changed, the monthly payments will be less. “A restructuring of the debt due to the lender can occur through the process of a Chapter 13 plan, and market conditions can be imposed on a lender,” says Hawkins. Reducing the loan balance The process of changing auto loan terms as part of Chapter 13 may also include what’s known as”cramdown. “cramdown,” which reduces the amount you pay the lender to the car’s fair market value. The timeframe of your car purchase is a crucial aspect in the cramdown process. In particular, there is a 910 rule that applies to the cramdown process. Newer vehicles If you purchased your car within 910 days of bankruptcy filing, you have to pay the full value of the car loan however, the interest rate could be decreased. Older cars: If you purchased your car more than 910 days before filing for bankruptcy You’re only required to pay the current reasonable market price. There are a variety of reasons why you should not keep your car during Chapter 13 bankruptcy In certain circumstances, it may not be feasible to keep your car while pursuing Chapter 13, or hanging on to it may not make sense. Some instances where this might be the case include: Your loan is in arrears, and you don’t have the financial resources in order to make the loan current or to continue making monthly payments. In this scenario it is possible to give up the vehicle. The car isn’t in good condition or not reliable. In these situations, giving up the car may be more sensible. The car is particularly valuable, and selling it could provide money for the repayment of your debts. You own a substantial equity in the car, which is greater than the bankruptcy exemption levels in your state. The final result Filing bankruptcy doesn’t automatically mean that a car bought with a secured loan is repossessed. Under both Chapter 7 and Chapter 13 bankruptcy laws, there are provisions to protect your car. Working with a bankruptcy attorney will help you determine which bankruptcy option is the best option for your personal financial situation.
SHARE:
Written by a Contributing Writer
Mia Taylor is a contributor to Bankrate and an award-winning journalist who has two decades of experience and worked as a staff reporter or contributor for some of the nation’s leading newspapers and websites including The Atlanta Journal-Constitution, the San Diego Union-Tribune, TheStreet, MSN and Credit.com.
The edit was done by Rhys Subitch Edited by Auto loans editor
Rhys has been editing and writing for Bankrate from late 2021. They are passionate about helping readers gain the confidence to control their finances through providing clear, well-researched information that break down complex subjects into bite-sized pieces.
Auto loans editor
Related Articles Auto Loans 4 min read Apr 22 2022
Auto Loans 3min read April 06 2022
Debt 2 min read Sep 01 2021
Personal Finance 2 min read April 23, 2013
About
Help
Legal Cookie settings Do not share my information with anyone else.
How we make money Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for the placement of sponsored products and, services, or when you click on specific links on our site. So, this compensation can impact how, where and when products are listed, except where prohibited by law. This is the case for our mortgage, home equity and other home loan products. Other factors, like our own rules for our website and whether the product is available within your area or at your own personal credit score may also influence the way and place products are listed on this site. We strive to offer a wide range offers, Bankrate does not include details about every financial or credit product or service. Bankrate, LLC NMLS ID# 1427381 | BR Tech Services, Inc. NMLS ID #1743443 |
|
(c) 2023 Bankrate, LLC. A Red Ventures company. All Rights reserved.
If you have any issues relating to wherever and how to use online payday loan same day funding (creditkgar.site), you can make contact with us at the web page.