Vehicle Worth 18000 Loan Against It For 22000 Will I Lose It In A Bankruptcy

2009-06-13   minute read

In your case, there is no equity in the vehicle (you owe more on the loan than the vehicle is worth).  The Trustee would check the lender's documents to verify that they have an enforceable lein on the vehicle and, if so, the Trustee wouldn't seize the vehicle.  It would then be a question as to whether or not you want to keep the vehicle and whether or not the lender is ok with you keeping it. Most lenders are happy to continue on with the loan arrangement as long as you've had a good payment history with them and you're not behind on your payments when the bankruptcy starts. That means that, after the bankruptcy occurs, you would continue to make the payments in accordance with the loan agreement and you're then able to keep the vehicle. If you default on your payments later, the lender can still repossess the vehicle - i.e., by keeping the vehicle and continuing with the payments after a bankruptcy is in place, you are accepting full responsibility for the loan again and you have to abide by the terms of the loan. If you don't, the lender will exercise its rights under the loan agreement.You and the lender make this choice at the start of the bankruptcy. If you choose not to keep the vehicle, it goes back to the lender and the bankruptcy releases you from any shortfall the lender may have when they dispose of the vehicle. There are a few lenders who have a policy that, if you go into bankruptcy, they won't allow you to continue on with a vehicle loan unless you can show that the vehicle is required for work or there is some other essential need. They will repossess the vehicle and the bankruptcy releases you from the full amount of the loan - i.e, if the lender sells the vehicle for less than what you owe, the bankruptcy prevents them from trying to collect that shortfall from you. So, in your case, it really depends on who the lender is and what your payment history is with them. If you want to get in touch with me or post another blog to give me that information, I can give you a pretty good idea of whether or not you'd be able to keep the vehicle. Judy Scott Meyers Norris Penny Limited [email protected]

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