First, we must determine whether or not your vehicle is an asset. Keep in mind that the Chapter 7 Trustee has an interest in assets. To be an asset, your car must be worth more than you owe. NADA can be used to appraise your vehicle. Using federal exemptions, you can shield up to $3,225 of your vehicle's equity. If you have more than that amount of equity, you can use a portion of your discretionary exemption to protect more. Almost all of my clients are able to retain their vehicles.
However, if you own a brand-new, paid-for 2010 Audi, you should be prepared to hand over the keys to the Trustee. Although the majority of my clients do not own luxury sports vehicles, you get my point. If your car is worth less than what you owe on it, you should carefully consider whether you want to retain it. Perhaps it is malfunctioning, has a very high interest rate, or is worth significantly less than what you owe. In such circumstances, you may wish to abandon the vehicle. You can abandon it, and any deficiency will be discharged in Chapter 7 of your bankruptcy.
If you have a car loan and still want the vehicle, you must execute a reaffirmation agreement. When you apply for bankruptcy, any signed loan agreements are voided. This includes auto financing. A contract of reaffirmation reinstates the auto loan. If you default after bankruptcy, the lender can repossess the vehicle, sell it at auction, and sue you for any deficiency, so make sure the vehicle is worth the risk.
Please consult my website, Downriver Bankruptcy, for additional information about bankruptcy.
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