Chapter 7 bankruptcy is often used when an individual has enough assets to liquidate to cover at least a portion of what they owe to debtors. This form of bankruptcy can bring about a lot of worries when it comes down to what will happen with your vehicles. Here are five typical questions people who file chapter 7 bankruptcy have about their automobile.
1. Does it matter if you only have one vehicle for your family?
This can depend on where you live and if there is a vehicle exemption for bankruptcy allowed in your state. If you have a vehicle that is valued below or at the exemption amount, the one vehicle may be left in your possession as long as you are not still in debt for it.
2. What happens if you are still making payments on your vehicle?
If you re still making payments on your vehicle, the equity that you have in your car may be more than what is allowed and your car may still have to be liquidated. However, this can depend on several different factors and should be further discussed with your attorney.
3. How do you determine how much equity you have in your vehicle?
If you do not owe on the vehicle, the equity is simply the amount the vehicle is valued at currently. On the other hand, if the vehicle in your possession is not paid for, the amount of equity will be determined by the car's value, but the amount you owe will be subtracted.
4. How do you go about surrendering a vehicle?
When you are notified that you must surrender your vehicle to the lender, talk with your attorney about the specific date that this should occur. In some cases, you will return the car directly to the lender, but in others, you may be required to give the car to your bankruptcy trustee who will then surrender the car on your behalf.
5. Will you be informed before the car is taken from your possession?
You will usually know in advance if you will be forced to give up your vehicle simply because the terms of the bankruptcy and what will happen will be specifically laid out by your attorney. However, you may not know the exact date that a vehicle will be repossessed by a lender if you do not go ahead and surrender it. It is much easier if you can arrange to surrender the vehicle instead of waiting for it to be repossessed.
Your car is likely one of the possessions you have that you do not want to lose. Be sure to discuss in great detail what your options will be once you file with your chapter 7 bankruptcy attorney (such as one found through http://www.howardgoodmanlaw.com/).