Can I keep my car in a Chapter 7 bankruptcy?

One of the questions we are frequently asked is "will I be able to keep my car if I file a Chapter 7 bankruptcy?" When you file a Chapter 7 bankruptcy, you must tell your creditors what you plan to do about secured debts, like a car loan. You have three options. You can surrender the car and walk away from the debt completely. You can indicate that you want to reaffirm the debt or you can redeem the car by paying the current market value of the car to the creditor. Another video will discuss redemptions. If you indicate that you want to reaffirm the debt, the creditor will normally send you a reaffirmation agreement with the terms for keeping the car. If you sign it and return it to the creditor, there will normally be a hearing before the Judge to determine whether the Judge will enter the reaffirmation agreement. If the agreement is entered, you are bound by the agreement as if you had not filed bankruptcy on that debt. If you miss a payment later, the creditor can repossess the car, sell it for next to nothing and then seek to recover the balance of the loan from you. This makes reaffirmation agreements very dangerous. However, there are ways around a reaffirmation agreement. You need to meet with an experienced bankruptcy attorney before you sign any reaffirmation agreement. Call us today at 276-6555 and we will be happy to meet with you to discuss your options.



Edrie Pfeiffer
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Edrie Pfeiffer, Bankruptcy & Divorce Attorney