If I File For Bankruptcy Can I Keep My Car

2009-07-31   minute read

The answer depends on a number of factors: -  If you own your car outright (there is no loan against it), and it is worth $5,000 or less, then it is "exempt property" in a bankruptcy - which means you can keep the car. -  If you own your car outright, and it is worth more than $5,000 (let's say $8,000), then only the first $5,000 of equity is exempt, and you would either have to pay the trustee $3,000 to keep your car, or you would have to let the trustee sell your car, and you would then get to keep the first $5,000 of proceeds.  As long as you can afford to pay the trustee (generally over a period of time) to keep your car, then you would be able to. -  If you owe money against your car, and the company you owe has a lien against the car (they would then be called a "secured creditor"), then you would have to continue to pay your monthly car payments, or the car will be taken by the secured creditor.  Again, if you actually have equity in the car (the amount the car is worth is actually more than the loan against it), then you would be allowed to keep the first $5,000 of equity, just like above. -  It is important to note that there are a couple of lenders who, even though your car payments may be up to date when you file for bankruptcy, still choose to repossess the car rather than let you continue to make payments.  You would need to discuss the particulars with a trustee. Wendy McMurtrie Meyers Norris Penny Limited 778-571-3520 [email protected]   

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