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If I file for bankrupcy, could I lose my car?

1 Answers. Asked on Dec 31st, 2016 on Bankruptcy - Illinois
More details to this question:
In the past 6 months, I have been in and out of the hospital, I lost my job and had to take another job with 50% less hours & pay, I had to move back home with my parents and I am fixing to run out of unemployment insurance. I know that filing bankruptcy is going to be my only option, but I still owe 2 years on my car and I don't want to lose my car. How can I file and still keep my car?
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Answered on Jan 02nd, 2017 at 9:56 AM

As you have said, it appears that BK7 is your only option.  There seems to be a lot of debt and you have no ability to service that debt.  A chapter 13 needs regular income, which does not exist at present.  Unfortunately, that also impacts your your ability to pay the car note.

So:  the real question is two-fold.  1. Can you exempt the car so it can be kept? and 2. Can you reaffirm the car note?  A reaffirmation is an agreement that, in spite of the Bankruptcy, you will remain liable on the Note; and, thereby, you will keep possession of the car, but you retain responsibility on the car note.  The kicker is the the BK Court needs to approve that agreement and insure you have the ability to pay this debt.

This brings us to the first question.  The car needs to be valued. There is a $2,400 car exemption; and any remaining "wild card" exemption can be used as well on the car.  Should the total exemption claimed plus the total amount due on the car note be either equal to or greater than the value, the car can be properly exempted on the BK Petition and, as such, free of any turn-over to the Trustee.  Hopefully, there is sufficient equity to tell the Court that you will make the payments as due, but, if you are unable to pay, the vehicle can be sold and the Note paid in full.  Provided the payments can be made (and the Court concurs that the desired reaffirmation is truly in your best interests), you can file Bankruptcy and keep the car.

Although you can file Bankruptcy by yourself, the suggestion is to consult with an experienced BK attorney.  This is a complicated matter that seems to require legal advice/review and, quite probably, legal representation.  As stated above there are valuation issues (i.e. both the car and your remaining personalty) and the need, if possible, to format the reaffirmation so it can be approved.  This presumes both the need to file a chapter 7 and the ability to exempt the car, both of which should be verified by an experienced BK attorney.

One can be found via an internet search, but a referral from your local Bar Association would be a good starting point.  Then a website review can be more focussed and followed by a call.  An appointment can then be set with your options and the fee and costs can be discussed.

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If you're struggling to pay off your delinquent debts and getting hounded by collection agencies, then it's time to address your financial problems. And filing for personal bankruptcy may be the ideal solution. Whether you're an individual or married couple considering Chapter 7 or Chapter 13 bankruptcy, or a business considering a Chapter 11 reorganization, or a farmer considering Chapter 12, you need the advice and guidance of an experienced bankruptcy attorney. Your lawyer can help determine which form of bankruptcy is right for you, prepare and file all of the paperwork, and advise you throughout the bankruptcy process.
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