We realize that for many people their automobile is essential to their ability to live and work in this area. Most people find that they are able to keep their cars. There are very, very few cases where people lose their cars in a chapter 7 bankruptcy. Look at the examples that follow. Most likely, one will apply to your situation.
| 9. My 1997 Datsun is fully paid for. It
has 80,000 miles on it and is worth about $450. May I keep it? |
|
Yes. It will use up $450.00 of your exemptions. |
|
| 10. My 1998 Buick is worth $6500 and I
owe GMAC $4500.00 on it, May I keep it? |
|
Yes. Continue making your monthly payments
on time and use up $2,000 of your exemptions. If you are behind in
your payments, try to come current as soon as possible. |
|
| 11. I am three months behind on my 2000
Olds. I would like to keep it. It is worth $4,000 and I owe $1500.
May it keep it? |
|
Chapter 7 will stop your creditor from
taking the car right away. If you can come current, do so as soon
as possible. If not, you have four ways to handle the arrearage. You
may refinance, reaffirm, redeem, or reorganize under Chapter 13. To "refinance" you
would go back to your original creditor or any other lender, and borrow
the outstanding balance. To "reaffirm," you would negotiate
a deal with your current lender to pay the past due amount. You may "redeem" by
paying, in a lump sum, an appraised, fair market value of the car
out of your exempt assets (or someone friendly might loan you the
$1,500). |
|
| 12. What do you mean by "reaffirm" or "reaffirmation"? |
|
Where it is in your best interests, the
court will allow you to reaffirm certain debts, i.e., pick those creditors
with whom you will remain personally liable for the debt. For example,
if you reaffirm a car loan, if you miss a payment later on and the
creditor sells the car for a loss, they can sue you for the loss,
attach your wages, and seize your assets, much as if you had not filed
bankruptcy. |
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