How To Keep Your Car If You File For Chapter 7-aizi

Legal Fairfax bankruptcy lawyer Michael Sandler received his Juris Doctor from George Mason University in 1999, and has since gone on to successfully represent hundreds of clients. His practice, The Law Offices of Michael J. O. Sandler PLLC, is small enough to enable him to individually help every client. Here, Sandler talks about what you can do to keep your car if you want to when you file a Chapter 7. As a bankruptcy lawyer, one of the questions I get asked most often is whether or not a client will be able to keep his car when he files a Chapter 7 bankruptcy. My answer is that its typically your choice, not the choice of the lender. Asking Bankruptcy Lawyers for Help If you file for bankruptcy, then you are allowed certain exemptions, or types of property, that are exempt from the bankruptcy. You get a $2,000 car exemption in the state of Virigina, as well as a$5,000 wild card which you can use for whatever you want. So if your car has more than $7,000 in equity, then you may actually make a payment to the trustee to keep it. For example, before the housing bust, a lot of people would take equity out of their houses and pay for their vehicles. If some who did this filed bankruptcy later on and his vehicle was worth $10,000 or $15,000 and it was paid off, then that would be a problem, as the trustee could then take it and sell it. But if you prefer to keep you car, then its a good idea to hire a good bankruptcy lawyer for help. I have had clients with vehicles worth perhaps $10,000 that are paid off, and we have negotiated agreements with the trustee to pay him $1,500 or $2,000 and therefore keep the vehicle, as we could not protect all of it. Signing a Reaffirmation Agreement Because vehicles that are paid off are 2004 or older in most cases, the trustee simply does not have any interest in them. If the vehicle is financed, then its probably upside-down in value, which means that there is not equity in that vehicle. Companies that give out car loans are already repossessing a lot of cars and auctioning them off for a fraction of what is owed on them. They do not want more of them they would rather you keep the vehicle and continue making the payments. Therefore, when you file a Chapter 7 bankruptcy, you may elect to keep the vehicle and enter into a reaffirmation agreement with the lender. That is an agreement to still be responsible to the same contract that you already have. Typically, the interest rate, monthly payment and total amount due do not change. Redeeming a Car In my experience, another option to keep the vehicle is to redeem it. By redeeming a vehicle, you are making a lump sum payment to the lender for the current market value. In other words, if you owe $15,000 on a car and it is only worth $8,000, you can pay $8,000 to the lender and the remaining balance will be discharged. There are some companies that specialize in making these redemption loans. Obviously the interest rate is higher, but in some circumstances, redemption can be an attractive option if the car is particularly far upside-down. Filing a Chapter 7 bankruptcy can help give you the fresh start you have been looking for. You might feel like you are drowning in debt, but the experienced bankruptcy lawyer can help you get back on your feet. For residents in Fairfax, I recommend calling The Law Offices of Michael J. O. Sandler PLLC for a free consultation. We can help you wade through the exemption quagmire and keep what you are entitled to keep including, often, your car. This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Publication of this article and your receipt of this article does not create an attorney-client relationship. About the Author: 相关的主题文章: