How To File For Bankruptcy And Keep Your Car

How Can I Keep My Tax Refund In Chapter 13 Bankruptcy

How to keep your car in Chapter 7 bankruptcy

The strategies discussed above will apply to tax refunds in Chapter 13 as well. However, if you aren’t able to protect the funds, you won’t turn them over to the trustee. Instead, you’d pay nonexempt funds through the Chapter 13 plan.

Also, an additional wrinkle exists because a Chapter 13 case takes three to five years to finish.

Chapter 13 files pay all disposable income to creditors through a Chapter 13 repayment plan. A potential income tax return you didn’t exempt when you filed could be problematic if your Chapter 13 trustee argues it’s extra disposable income and expects you to hand it over for creditor payment.

To avoid this problem, consider adjusting your withholding to minimize your refund before filing your bankruptcy case. Otherwise, your bankruptcy lawyer will be in the best position to explain the Chapter 13 practices in your local court.

Find out what to do if you can’t afford a bankruptcy attorney.

If You Have A Car Loan And Want To Keep The Car After Filing Bankruptcy You’ll Have To Pay For It

Many people are under the mistaken belief that filing bankruptcy allows you to wipe out an auto loan and keep the vehicle free and clear of any payments. It just isn’t true. Bankruptcy will unwind your obligation to pay back the loan. But if you don’t make the payment, you won’t be driving the car for long. So the short answer is noyou won’t get a free car in bankruptcy.

Even so, it isn’t a given that you’ll lose a car with a car loan, either. In this article, you’ll learn:

  • what happens to car loans in bankruptcy
  • how to keep a financed car in Chapters 7 and 13, and
  • “surrendering” a car you want to return to the lender.

We have many more helpful articles that explain what happens to cars in bankruptcy. Look for links to additional resources at the end of this article.

Applying For A Secured Credit Card

Secured credit cards require a deposit equal to your credit line so, for example, you would put down a $500 deposit and get a card that has a limit of $500. Although it doesnt feel like a credit card, this is a great way to start rebuilding your credit as they are easier to obtain since the bank has your cash as collateral. Another option is to apply for an entry-level card.

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What If You Owe More Than Fair Market Value Or You Cant Afford The Payments

If you have a significant shortfall on your car, it may be prudent to simply surrender the car to the lender when you go bankrupt so that you are not overpaying for the vehicle. If you think your car loan or lease is too expensive, and you cant afford to keep up with your payments, you have the option of handing back the vehicle to the lender.

In either case, you must return the vehicle to lender before you file. If you do surrender the car to the secured lender, any resulting shortfall after they sell the vehicle is eliminated as part of your bankruptcy.

In rare circumstances, people sometimes offer their vehicle as collateral for a larger consolidation loan. This is slightly more complicated however a trustee can walk you through options that can help you keep the vehicle if that makes sense.

How Long Does A Chapter 7 Stay On Your Credit

After Filing Chapter 13 When Can I Buy A Car

Asked by: Matt Littel

A Chapter 7 bankruptcy can stay on your credit report for up to 10 years from the date the bankruptcy was filed, while a Chapter 13 bankruptcy will fall off your report seven years after the filing date. After the allotted seven or 10 years, the bankruptcy will automatically fall off your credit report.

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Can I Keep My House And Car In Bankruptcy

You have an opportunity to keep your car and house still when filing for bankruptcy. However, this is only possible depending on the following factors:

  • The amount of equity you have in the property you attempt to keep.
  • The equity in the property exceeds the bankruptcy exemption for that property.
  • Whether you have secured a loan with the property and whether the bank has reaffirmed the loan.

Can I Buy A Car After Filing For Bankruptcy

Declaring bankruptcy is a big decision but it may be the right one. Once you move past the painful initial stage of admitting your debt is unmanageable, you can start thinking about the future. However, you may have questions about buying a car after bankruptcy.

The good news is that it is possible to buy a car after filing for bankruptcy. However, your options may differ depending on your specific type of bankruptcy case, how long it has been since you filed, and why you need the car.

The attorneys at Sasser Law Firm offer free consultations to discuss bankruptcy options.

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What Happens To My Car During Bankruptcy

Filing for bankruptcy is a serious decision that can damage your credit for seven or 10 years, depending on the type of bankruptcy. But if you’re drowning in debt you can’t pay, it can serve as a last resort to help you hit “reset” on your finances.

There are two main types of bankruptcy: Chapter 7, which liquidates some of your assets, and Chapter 13, which focuses on repaying debts. What happens to your car in bankruptcy depends both on the type of bankruptcy you file and how much equity you have in your vehicle.

Different Ways To File For Bankruptcy

Bankruptcy – [Keeping your House and Car]

Bankruptcy is a process in which the court decides what the best route is for a person with overwhelming debt to pay as much as possible, given their assets. The solution may be Chapter 7, which discharges debts but also liquidates assets, though not all, of a persons assets. Chapter 13 bankruptcy allows a person to keep their assets, but puts them on a strict repayment plan.

No matter which type you file for, the court puts an automatic stay on any foreclosure action. This means that if your house was being foreclosed on, that procedure will stop as the court sorts out your ability to pay. It doesnt mean, however, you automatically keep your house.

In both types of bankruptcy, there is a homestead exemption, a way to protect some of the equity you have built. Its another element of bankruptcy designed to make it more possible to keep your house. Each type of bankruptcy is a totally different process, but in each, the idea behind exemptions is that the person needs to protect some important assets in order to get by. There are also exemptions for keeping your car and other necessary items. The amounts vary by state, but the types of things you can exempt are limited to what you need to get by. Luxury items are not on the list.

You are required to have lived in a state, in that house, for 40 months, in general, to claim a state exemption. Check with your state rules to see what the details are.

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Contact An Experienced Illinois Bankruptcy Lawyer

Attorney Brian G. Hiatt can help you learn more about how filing bankruptcy can help you protect your possessions from being sold off to pay for your debts. Contact the firm in Bourbonnais by calling 815-304-5441 or by emailing the firm directly.

Brian G. Hiatts law firm is a debt relief agency. It helps people file for bankruptcy relief under the Bankruptcy Code.

Keeping A Vehicle That You Own Outright When You File Bankruptcy

In Ontario, you can keep any motor vehicle worth up to $7,117 when you declare bankruptcy. You can research other provincial exemption amounts across Canada here.

Most older vehicles qualify for this exemption. Your trustee will look up what is known as the black book value of your car or truck to determine whether your vehicle will be considered property in your bankruptcy or will fall under the provincial exemption limit.

If you own a car outright and the fair market value is more than the exemption limit, you can propose to buy out the realizable portion from your trustee over the period of your bankruptcy.

If for example, you have a car worth $8,517, you would have to pay your trustee $1,400. You could do this by making additional payments of $156 during a typical 9-month bankruptcy. If that monthly payment is too much, talk to our trustees about a consumer proposal.

You can keep one motor vehicle under these exemption rules. If you own more than one vehicle and would like to keep both, a consumer proposal may be a better option.

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Protect Your Tax Refund By Adjusting Your Withholdings

Ensuring you aren’t owed a tax refund at the end of the year is the best way to avoid having a refund the trustee appointed to your case can take. Here’s why.

You’re essentially setting up a savings account if you pay more in taxes than needed each month. The problem? Protecting any cash or money you’re entitled to receive when filing for bankruptcy is difficult. You’d need to either spend it before filing or be able to protect it with a bankruptcy exemption, and doing so isn’t always possible.

Ease The Burden Today Schedule A Consultation

Filing For Chapter 7 Bankruptcy Prevents Car Repossession?

Are you wondering if you have a case? Our attorneys combined as a team have hundreds of years of experience dealing with all kinds of legal cases throughout Richmond, Harrisonburg, and all over Virginia. It is our goal to serve our clients with the utmost integrity, respect, and dignity regardless of your circumstances.

When you complete this contact form, youll be contacted by one of our representatives to get more details regarding your inquiry. Our firm is committed to representing our clients rights to ensure you receive the most favorable results possible.

As with many legal issues, minutes matter. The evidence fades, witnesses disappear, and the stories change. If youre facing an urgent legal matter, Cravens & Noll can provide hope to your situation.

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The Tools Of The Trade Exemption

Pursuant to Section 522 of the US Bankruptcy Code, you can seek an additional exemption for your car if its considered part of your business or tool of the trade. Debtors can exempt up to $2,525 of tools of the trade they or their dependents own. The US Bankruptcy Code allows for these exemptions to overlap with other exemptions. For example, a motor vehicle sometimes can be claimed as exempt so that a car worth about $6,500 could be claimed by combining these sections. When the wild card exemption is added up, you can get $6,450 exempted.

Keeping Your Car With A Chapter 13 Bankruptcy

A Chapter 13 bankruptcy is a debt consolidation program designed to help protect your property and re-establish payments with your creditors if you have fallen behind. The program offers many unique benefits that can actually help you keep your vehicle, improve your payment terms and re-establish your credit.

The Chapter 13 plan prioritizes payments to secured creditors, such as your car loan. Payments to general unsecured debts are deferred until a later time. Most often, general unsecured debts are significantly reduced or eliminated under the program . The program is designed to create a balanced budget based on your income and expenses. This means you can file bankruptcy and keep your car!

If you have gotten behind on your vehicle payments, the Chapter 13 plan can bring your account current through the debt consolidation process. The Chapter 13 bankruptcy will protect your car from a repossession. If your vehicle has been repossessed, a Chapter 13 will help you to get your car back provided it has not been sold at auction.

Improving Your Payment TermsIn short, the Chapter 13 program is a way of refinancing your vehicle as well as consolidating other debts. There are several ways that the Chapter 13 plan can improve your payment terms on your vehicle loan.

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Main Types Of Bankruptcy For Consumers

Consumers primarily use Chapter 7 and Chapter 13 for filing bankruptcy. Either will activate an automatic stay to prevent creditors from collecting debt while your case is being processed. Filing either type of bankruptcy will decrease your anywhere from 130 to 240 points. People with higher credit scores will see their credit scores drop more than those whose credit scores were lower at the time of filing. But regardless of what your credit score is, when you file for bankruptcy, you will likely end up with a bad credit score for a while.

Bankruptcy can be complicated, so it might be a good idea to hire a bankruptcy attorney. If you have a simpler, Chapter 7 case, you can use Upsolveâs online tool to file for free without an attorney.

How To Use A Reaffirmation Agreement To Keep A Car In Chapter 7 Bankruptcy

Want to Keep Your Car in a Chapter 7 Bankruptcy? Learn How.

The bankruptcy law provides an exception to the above rule:if you sign a reaffirmation agreement, the lender cannot consider you indefault and repossess the car just because you filed for bankruptcy. So what is a reaffirmation agreement?

A reaffirmation agreement is a document that states that youare agreeing to be responsible for a debt after bankruptcy. So, if you sign a reaffirmation agreement forthe car loan, the agreement gets approved, and you later stop payments on theloan, the lender can sue and recover from you any money still owed on theloan. Remember that normally the lenderwould not be able to do this, because Chapter 7 bankruptcy eliminates yourpersonal liability on the car loan.

The way to ensure that you can keep a car in Chapter 7bankruptcy, then, is to sign a reaffirmation agreement, and to comply with the otherrequirements of the loan contract, which usually include making timely paymentsand keeping the car insured. If you dothese three thingstimely sign a reaffirmation agreement, keep making yourpayments, and keep the car insuredyou can keep the car after Chapter 7bankruptcy.

There are exceptions to this general approach, such as when the lender makes significant concessions on the interest rate or the principal in the reaffirmation agreement, so it is best to get competent legal advice before deciding how best to deal with a reaffirmation agreement

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Bankruptcy On A Credit Report In A Nutshell

Filing bankruptcy is often a last resort, but it could be the right option, depending on someoneâs financial situation. Keep in mind that bankruptcy can hurt credit and stay on credit reports for seven or 10 years. Wherever you may be on your financial journey, itâs always a good idea to work on improving credit scores.

We hope you found this helpful. Our content is not intended to provide legal, investment or financial advice or to indicate that a particular Capital One product or service is available or right for you. For specific advice about your unique circumstances, consider talking with a qualified professional.

Capital One does not provide, endorse or guarantee any third-party product, service, information, or recommendation listed above. The third parties listed are solely responsible for their products and services, and all trademarks listed are the property of their respective owners.

Your CreditWise score is calculated using the TransUnion® VantageScore® 3.0 model, which is one of many credit scoring models. It may not be the same model your lender uses, but it can be one accurate measure of your credit health. The availability of the CreditWise tool depends on our ability to obtain your credit history from TransUnion. Some monitoring and alerts may not be available to you if the information you enter at enrollment does not match the information in your credit file at one or more consumer reporting agencies.

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How Should I Pay For A Car After My Bankruptcy Discharge

Once you have discharged your debt through bankruptcy, you can purchase a car however you want. But even if your credit score has recovered, paying with cash may be preferable if that is financially possible. If you do choose to finance the purchase then those payments will help to rebuild your credit score.

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Exemptions During A Chapter 7 Bankruptcy In Georgia

When you file for Chapter 7 bankruptcy, the state of Georgia allows a $5,000 car exemption. This means that if you have less than $5,000 of equity in your car, you will be able to keep it. In addition, Georgia allows a wild card exemption of up to $5,000. The wild card exemption covers any of your property up to $5,000. If you havent used it yet, you can put your wild card exemption towards your car equity.

If your car is worth more than $10,000 in the state of Georgia and you have exhausted all of your exemptions, the trustee of your bankruptcy can sell your car, pay you the amount of your exemptions, and use the remainder to pay back creditors.

If you are filing for bankruptcy jointly with a spouse, you can add together your $5,000 car exemptions, totaling $10,000 in car exemptions alone.

What Is Bankruptcy

Keep Your Vehicle in Chapter 13 Bankruptcy

Bankruptcy gives you the financial fresh start you need when you are overwhelmed by debt and have no other way of catching up on all your bills.

The table below explores two common types of bankruptcy, Chapters 7 and 13.

Chapter 7 Bankruptcy Personal Ch 7 bankruptcy is an opportunity to have your debt discharged so that you can get a fresh start on your life.

During the process of a Ch 7 bankruptcy, your assets of value will be liquidated with the proceeds paid to your creditors. Once you file with the court, the court will assign a trustee to oversee your case.

The trustee will tell you which property you can keep and what you will be required to sell. This type of bankruptcy does not offer you a way to catch up on any payments that you might have missed on your mortgage or car loan.

They will allow you to retain basic possessions, but anything of substantial value will need to be sold.

Chapter 13 Bankruptcy Ch 13 bankruptcy will also give you the fresh financial start you need. However, this type of bankruptcy is handled far differently from a Ch 7 bankruptcy.

With a Ch 13 bankruptcy, your debt is restructured and you have the opportunity to catch up on your bills, keep your home, and keep your car.

You will be required to make monthly payments to the courts for three to five years, and you will need to pay back a portion of any unsecured debt you may have. Once the time set by the court is up, the remainder of your debt is discharged.

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