Will I Lose My Car?

Phoenix, Arizona Chapter 7 and Chapter 13 Lawyers

Whether or not you will lose your car depends in part upon whether you file for bankruptcy under Chapter 7 or Chapter 13. Under the terms of Chapter 7, unsecured debt related to credit cards and certain kinds of loans can be eliminated. However, in doing so, the court will first liquidate certain kinds of property in order to pay creditors a percentage of what you owe them. This may include your car or it may not - it all depends on the debt involved, what property is considered a "luxury item," and whether you can afford to continue making payments on a car loan.

It's more likely that you can keep your car if you file for Chapter 13 bankruptcy since Chapter 13 is essentially a restructuring of debt instead of an elimination of it. Since a repayment schedule is part of filing for Chapter 13, you may be able to negotiate a repayment plan with the bank that holds your car loan. However, whether you can file under Chapter 7 or Chapter 13 will depend on your income and financial situation.

Our attorneys can evaluate your situation and discuss the options available to you. If you qualify for Chapter 7, we can explain how you can keep your car without necessarily going further into debt. If you qualify for Chapter 13, our lawyers can include your car loan as part of your proposed repayment plan to creditors. To schedule a free consultation, contact the Bankruptcy Helpers at Gukeisen Law Group today.

How Can I Keep My Car Under the Terms of Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is not intended as a means for restructuring personal debt; rather, it is intended to discharge certain kinds of unsecured debt like credit cards, bills, and different kinds of loans. As a result, the court is more interested in determining what assets you have available that can be used to pay creditors a percentage of what is owed them. If you own luxury items like a sail boat, plasma TV, or an expensive espresso machine, the court may liquidate them in order to pay off creditors. But what if you own a luxury car?

A great deal will depend on whether you can afford continuing making payments on a car loan and whether the car in question is "necessary." If you drive a $40,000 SUV and can barely make payments on it, the court will likely seize your car. If you can afford making payments AND satisfy your creditors at the same time, you can likely keep your car. If, however, your creditors would be better served by your selling the $40,000 car and buying a cheaper model or a used car, you may be forced to sell it.

How Can I Keep My Car Under the Terms of Chapter 13 Bankruptcy?

It's easier to keep your car under the term of Chapter 13 bankruptcy since it involves a reorganization of personal debt. Typically, persons filing for bankruptcy under Chapter 13 are given 3 to 5 years to pay back all or a portion of their debt. Usually, this involves paying back some percentage of what is owed. In order to file for Chapter 13, however, you need to be gainfully employed and have additional disposable income as well. Consequently, it's much easier to create a repayment plan agreeable to creditors that allows you to keep your car. However, as in Chapter 7, you cannot simply discharge the debt owed on a car - you must continue making some kind of payment on it to avoid repossession.

Need Information? Contact Bankruptcy Helpers at Gukeisen Law Group

As a law firm that practices exclusively in the area of bankruptcy, our attorneys understand how to help clients create a financial plan that allows them to file for bankruptcy and keep their car. If you have questions about filing under Chapter 7 or Chapter 13, contact our at bankruptcy lawyers at Bankruptcy Helpers at Gukeisen Law Group today and schedule a free consultation.