Keeping Your Car in a Chapter 13 Bankruptcy
Bankruptcy is an extremely useful tool for helping people move forward and get a new start on their finances. Unfortunately, many people do not take advantage of bankruptcy because of fears based on myths or misunderstandings. One of the more common reasons that people don’t file is that they are scared of losing their car.
For many people, giving up their car just isn’t an option. You may need your car to get to work every day. You might use it to transport your kids to school and other activities. Your car also gives you a freedom that just isn’t matched by public transportation. Losing your car means losing your independence and making your life much more difficult. Luckily, you don’t have to.
The reason many people believe that they will need to give up their car when they file bankruptcy is because one type of bankruptcy, Chapter 7, sometimes requires the person filing to liquidate a portion of their assets. Even Chapter 7 allows an exemption for a certain amount of value or equity in a car. If your car isn’t worth much, Chapter 7 might be a good option for you.
Under Chapter 13 bankruptcy, your cars will always remain yours. So will your motorcycles, boats, trucks and ATVs. In fact, you won’t have to give up any of your property, although you are free to sell your property if you wish. The second your Chicago bankruptcy attorney files your Chapter 13 action, all debt collection and repossession activities stop. As long as you make the necessary payments each month, your car will not be repossessed.
Chapter 13 is usually called “debt reorganization.” What this means is that your unsecured debts, such as credit card debt, medical debt and personal loans, are reorganized. Instead of paying each bill individually, they are all combined into one payment each month. This payment is based on what you can actually afford, not what your debt collectors want. At the end of the three-to-five year repayment period, some of your debts disappear.
To find out whether Chapter 13 debt reorganization or Chapter 7 bankruptcy filing is the right way to help you keep your car, you should speak to an experienced attorney. At DebtStoppers, our Chicago legal team offers free consultations to all prospective clients. We urge you to call us at 800-440-7235 or contact us online to plan your one-on-one debt analysis.