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If I file an Olympia bankruptcy, can I keep my car, auto, or vehicle?
Can I stop a car repossession with a Thurston County, WA bankruptcy?
What happens to my car in an Olympia bankruptcy?
The bankruptcy process is designed to give you a fresh start and you wouldn’t have much of a fresh start if you didn’t have a car after bankruptcy. Most modest, older cars that are paid off can be protected in bankruptcy. If you are still making payments, you probably don’t have enough equity in the car put in danger of being taken to pay your creditors if it is newer.
You should consult an OIympia bankruptcy attorney if you have more than a few thousand dollars of equity in a car. The amount you can protect depends on a careful choice of “exemptions” or the legal limits on the amount of property that could be taken to pay creditors.
If you are making payments on a car and you file an Olympia, WA Chapter 7, you can keep your car if you keep making the payments. Your lender will want you to sign a “reaffirmation agreement”. The lender can actually repossess your car if you do not sign this agreement, though whether they actually will depends on the lender. If you do sign the reaffirmation, then you are taking the risk of defaulting or insurance not covering the loss if the car is destroyed because this takes the debt outside of our bankruptcy discharge.
Our Olympia bankruptcy attorneys advise all of out Thurston County clients to think very carefully about signing the reaffirmation. If you don’t think you can make the payments even after you eliminate most or all of your other debt in a bankruptcy, then it would be better to walk away from the car loan and “surrender” the car. Am Olympia Chapter 7 bankruptcy is specifically designed to give you and your family a fresh financial start. And, you do not want to be stuck with an unaffordable car payment after filing your Olympia bankruptcy.
Another option in an Olympia Chapter 7 is called a “redemption”. You can redeem a car by paying off the loan at the replacement value of the car. If your car is worth less than the loan, this may be an option. There are currently lenders that are willing to loan to some debtors the funds necessary to redeem their car in bankruptcy. If you think that this is an option you want to consider, one of our Olympia bankruptcy lawyers will be happy to discuss it with you in more detail.
In an Olympia Chapter 13, you can restructure your car loan and consolidate the payments with back mortgage payments, taxes, back alimony or child support, credit cards, payday loans, student loans – even traffic and parking tickets. If you purchased your car more than 910 days ago or your loan wasn’t used to buy the car (a title loan), then you can “cram down” the payments in a Chapter 13 plan.
This means you pay only the value of the car as “secured” and anything over that amount as “unsecured”, which could result in a huge savings. Even if you can’t “cram down” the car, you can greatly reduce your interest in a Chapter 13 and spread out the payments to make it more affordable.
Either bankruptcy stops a repossession dead in its tracks, though a creditor can get court permission to repossess the car in a Chapter 7 if you are behind on your payments. In a Chapter 13, the creditor has to deal with your repayment plan. In some cases we can even get a car that has already been repossessed back for our clients after filing a Chapter 13. The creditor can object to how they are treated in the plan, but our Olympia bankruptcy attorneys will aggressively represent you against any of their objections. If your creditors object, the final decision will be made by a bankruptcy judge.
Can I keep my car or automobile if I file a Washington State bankruptcy? In many situations, YES!
Can I stop a car repossession with an Olympia bankruptcy? In many situations, YES!
To learn more about WA debt relief for cars, autos, and vehicles in an Olympia bankruptcy, please call our offices for an initial consultation. One of our Olympia bankruptcy attorneys can review your car or vehicle situation in detail and then discuss your legal rights and options.