Open navigation Main Menu Mortgages

Financing a home purchase Refinancing your current loan Finding the best lender Additional Information
Looking for a financial advisor? Try our three minute test and match with an advisor today.



Main Menu Banking

Calculators to compare accounts Use the calculators and get help from bank reviews
Looking for a financial advisor? Take our 3 minute quiz and connect the advisor you want today.



Main Menu Credit cards

Compare according to category Compare using credit Compare by issuer Get advice
Looking for the ideal credit card? You can narrow your search using CardMatch(tm)



Main Menu Loans

Personal Auto Loans, Student Loans, Loans Calculators for loans
Find an individual loan in 2 minutes or less Answer some questions to get offers--with no impact on the credit rating.



Main Menu Investing

Best of Brokerages and robo-advisors Learn the basics Additional resources
Looking for a financial advisor? Try our three minute test and match to an adviser today.



Main Menu Home equity

Find the most competitive rates Lender reviews. Calculators. base
Looking for a financial advisor? Take our 3 minute quiz and connect the advisor you want today.



Main Menu Real estate

Selling a home Buying a home Finding the right agent sources
Looking for a financial advisor? Take our 3 minute quiz and connect with an advisor today.



Main Menu Insurance

Car Insurance Homeowners insurance Other Insurance Company reviews
Looking for a financial advisor? Try our three minute test and then match up to an adviser today.



Main Menu Retirement

Retirement plans & accounts Learn the basics Retirement calculators Additional resources
Looking for a financial advisor? Try our three minute test and connect to an adviser today.



Search open Close search

Submit


How to file for bankruptcy and keep your car Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial choices by offering you interactive tools and financial calculators, publishing original and objective content. This allows you to conduct research and compare information at no cost to help you make sound financial decisions. Bankrate has agreements with issuers, including but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Profit The deals that are advertised on this site come from companies that pay us. This compensation could affect how and when products are featured on the site, such as the sequence in which they appear within the listing categories and other categories, unless prohibited by law. Our mortgage home equity, mortgage and other home loan products. However, this compensation will affect the information we provide, or the reviews you read on this site. We do not contain the entire universe of businesses or financial offers that may be available to you.



SHARE:

Tetra Images/Getty Images
5 min read Published March 20, 2023
Written by Mia Taylor Written by Contributing Writer

Mia Taylor is a contributor to Bankrate and an award-winning journalist who has two decades of experience and worked as a staff reporter or contributor for some of the nation's leading newspapers and websites including The Atlanta Journal-Constitution, the San Diego Union-Tribune, TheStreet, MSN and Credit.com.







Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been writing and editing for Bankrate since the end of 2021. They are dedicated to helping readers gain the confidence to control their finances through providing precise, well-studied information that breaks down complicated subjects into bite-sized pieces.









The promise of the Bankrate promise
More details
At Bankrate we strive to help you make better financial choices. While we adhere to strict editorial integrity ,
this post may contain references to products from our partners. Here's an explanation for how we earn money .

The promise of the Bankrate promise
Established in 1976, Bankrate has a long track experience of helping customers make smart financial choices.
We've earned this name for over four decades by demystifying the financial decision-making
process and giving people confidence about the actions they should follow next. Bankrate follows a strict ,
So you can be sure you can trust us to put your needs first. All of our content is written by and edited by ,
We make sure that everything we publish is objective, accurate and trustworthy. Our loans reporters and editors concentrate on the things that consumers care about most -- the different kinds of loans available as well as the best rates, the most reliable lenders, how to pay off debt and many more, so you can feel confident when making your investment.



Integrity in editing
Bankrate follows a strict and rigorous policy, so you can rest assured that we put your interests first. Our award-winning editors, reporters and editors create honest and accurate content to help you make the right financial choices. The key principles We value your trust. Our aim is to provide readers with truthful and impartial information, and we have editorial standards in place to ensure that happens. Our reporters and editors thoroughly check the accuracy of editorial content to ensure the information you're reading is accurate. We maintain a firewall with our advertising partners and the editorial team. Our editorial team does not receive direct compensation through our sponsors. Editorial Independence Bankrate's team of editors writes for YOU as the reader. Our goal is to give you the best advice to assist you in making smart personal finance decisions. We follow rigorous guidelines that ensure our content isn't in any way influenced by advertising. Our editorial team is not paid any compensation directly from advertisers and our content is thoroughly verified to guarantee its accuracy. If you're looking at an article or review, you can trust that you're getting credible and reliable information.



How we make money
There are money-related questions. Bankrate can help. Our experts have been helping you manage your money for over four years. We continually strive to provide consumers with the expert guidance and tools required to be successful throughout their financial journey. Bankrate adheres to a strict code of conduct , which means you can trust that our content is honest and reliable. Our award-winning editors and journalists provide honest and trustworthy content to help you make the right financial decisions. Our content produced by our editorial staff is factual, accurate, and not influenced by our advertisers. We're open regarding how we're capable of bringing high-quality content, competitive rates and useful tools to our customers by revealing how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for placement of sponsored products andservices or through you clicking certain links posted on our site. So, this compensation can impact how, where and in what order products appear within listing categories, unless prohibited by law for our mortgage, home equity and other home loan products. Other factors, like our own website rules and whether a product is available in the area you reside in or is within your own personal credit score could also affect how and where products appear on this website. Although we try to offer a wide range offers, Bankrate does not include specific information on every credit or financial product or service.



If you're thinking of doing so , there are options which can prevent your car from being taken away -- even if you haven't paid off your auto loan. In several states, you could be able to avoid repossession of your vehicle through bankruptcy code exemptions, but the laws differ from state to state. Are you able to protect your vehicle through bankruptcy?
Both Chapter 7 and Chapter 13 bankruptcy include provisions through which you might be able keep the car you bought using secured loan.


How to preserve your vehicle by filing Chapter 7 bankruptcy Car loans are secured, which means the car is pledged as collateral in order to pay back the loan. Because the car serves as collateral, it is able to be taken away by the lender when you do not maintain payments on the debt. However under Chapter 7, the most well-known bankruptcy for people, you have a few options to hold on to your vehicle. "To keep your car while being in Chapter 7, the debtor must remain current with the lender or perform a'redemption that involves paying back the lender, or perform a 'reaffirmation,' which could mean altering the loan conditions, however this is subject to lender approval," says Lamar Hawkins an attorney for bankruptcy at Guidant Law. Here's how redemption and reaffirmation works: Redemption: The process of pursuing redemption involves to your creditor the vehicle's current fair market value. If you can afford to make this happen it could make your things easier in the future since you'll no longer have to pay for car loans. However, since most people file for bankruptcy at a time when cash is scarce it's not a viable option. Reaffirm: This option permits you to make payments on your loan until you file for bankruptcy. By reaffirming your debt you sign a new agreement to continue making payments according to a schedule set by both you and your lender and may also include revised loan conditions. Bankrate's tip
If neither option works financially for you You can also surrender your vehicle to the creditor and get the debt wiped off.


"When you receive the Chapter 7 Discharge, you are no longer liable for personal obligation to pay for the loan," says Pennsylvania-based bankruptcy attorney Dai Rosenblum. "All the creditor can do is take their collateralthat is, your vehicle. They can never sue you for money." The bankruptcy exemptions when you file in Chapter 7, your assets are sold or liquidated to pay creditors. But a bankruptcy court allows that you keep specified amount of your possessions up to a specific dollar value, according to Debt.org. This is referred to as the "exemption." This is the federal exemption limit is $4,000. However, many states have their own exemption limit which must be followed Certain states' exemptions are higher than $4,000, while others are less. The value of your vehicle when you file bankruptcy is not based on what you paid for it. In many states, the value is determined by the value of the car's cash value based on such factors as the car's year, make and mileage. Car industry sources like Kelley Blue Book or Edmunds can also be used to help determine the value of your vehicle. If the value of your vehicle is found to be less than your state's exemption limit, then you'll be permitted to keep the car even when you file for bankruptcy. However when the vehicle is valued higher than the exemption, bankruptcy trustees may decide to sell the vehicle to help you pay off your creditors. This is how it works If the exemption for your state is $4,000 and your car's value is $2,000, you're likely to be permitted to keep the vehicle since it's value is less than the exemption. If, on the other hand the exemption in your state is $4,000 and your vehicle is worth $10,000, a bankruptcy trustee may sell the vehicle and use the profits to pay off debt. Reasons you wouldn't keep your vehicle during Chapter 7 bankruptcy Keeping your car may not always be feasible in the event of making a Chapter 7 bankruptcy. In some cases, it doesn't make sense financially to try and hang on to your car. In the process of deciding on these issues, the value of your car and your equity in the vehicle will play an important role. The equity in your car and bankruptcy are similar to a mortgage for the property equity is calculated by subtracting the remaining amount owe on your car loan from the current market value. "For instance, if you own a vehicle with an estimated fair market value of $10,000, and an outstanding $1,000 loan balance, you have $9,000 equity," says Rosenblum. In the event that your equity amount is greater than the exemption that a bankruptcy trustee may choose to sell the car and apply the proceeds toward paying off your debts. It's not financially sensible keeping the vehicle.. Finally, it's also worth bearing the fact that the car's fair market value is on the car loan and you want to keep the car won't necessarily be a smart financial decision. "Very often there is a situation where the loan balance is greater than what you can get for the car, and without the means or desire to keep the car, the filer lets it go," says Michael Sullivan who is a personal financial advisor of the non-profit financial counseling firm Take Charge America. How to keep your vehicle through Chapter 13 bankruptcy Chapter 13 bankruptcy also gives you several options for keeping your vehicle. "The Chapter 7 framework is the basis for Chapter 13," says Rosenblum. "But with Chapter 13, you reorganize your debt." Creating the payment plan is a an element of Chapter 13 debt reorganization, a three- to five-year repayment plan will be developed which takes into account your income and assets. The aim of the Chapter 13 process is to let you keep your possessions, including your car, and pay off your debt. In addition, if you're late on your payments, the process will oblige you to make up the gap and pay on time moving forward. The terms that apply to your loan The court may also require that the lender modify the car loan conditions, such as lower interest rates, this is another method to aid in keeping the vehicle. With revised terms, the monthly installments will be lower. "A Rewrite of the debt due to the lender can occur by way of the Chapter 13 plan, and market conditions can be imposed on a lender," says Hawkins. The reduction of the loan amount altering your auto loan terms in the context in Chapter 13 may also include the process known as"cramdown. "cramdown," which reduces the amount you pay to the lender according to the vehicle's actual market value. The timing of your car purchase is a significant factor when it comes to the cramdown process. In particular, there's a rule of 910 that applies to cramdowns. Newer vehicles If you purchased your vehicle within 910 days of bankruptcy, then you are required to pay the full value of the car loan, though the interest rate could be reduced. Older cars: If purchased your car more than 910 days before filing for bankruptcy, you're only required to repay the car's current actual market value. The reasons you shouldn't keep your vehicle during Chapter 13 bankruptcy In certain situations, it might not be possible to keep your vehicle when you are pursuing Chapter 13, or hanging on to it may not be a good idea. Some instances where this might hold true include: The loan is in arrears and you don't have the financial resources for bringing the loan current or to make ongoing monthly payments. In this situation, you may have to give up the vehicle. The car isn't in good shape or is unreliable. Under these circumstances, simply giving up the car may be a better option. The car is extremely valuable and selling it could provide money in order to repay your outstanding debts. You have significant equity in the vehicle, which exceeds the bankruptcy exemption levels in the state you reside in. The bottom line Filing bankruptcy doesn't automatically mean a car purchased with secured loan is repossessed. In each of the Chapter 7 and Chapter 13 bankruptcy codes, you can secure your vehicle. A bankruptcy lawyer can help you decide which approach to bankruptcy makes the most sense for your financial situation.


SHARE:
Written by Contributing Writer

Mia Taylor is a contributor to Bankrate and an award-winning journalist who has two decades of experience and worked as a staff reporter or contributor for some of the nation's leading newspapers and websites including The Atlanta Journal-Constitution, the San Diego Union-Tribune, TheStreet, MSN and Credit.com.



Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been writing and editing for Bankrate since late 2021. They are dedicated to helping readers gain the confidence to control their finances through providing clear, well-researched information that break down complicated topics into manageable bites.






Auto loans editor




Related Articles Auto Loans 4 min read Apr 22, 2022

Auto Loans: 3 minutes read April 06, 2022

Debt 2 min read Sep 01 2021

Personal Finance 2 min read Apr 23, 2013






About
Help
Legal Cookie settings Don't sell my personal information
How we make money Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or for you clicking certain links posted on our website. So, this compensation can affect the way, location and in what order products are listed, except where prohibited by law. We also offer mortgage, home equity and other products for home loans. Other factors, such as our own website rules and whether the product is available in your area or at your personal credit score may also influence how and where products appear on this site. We strive to offer an array of offers, Bankrate does not include details about every credit or financial product or service. Bankrate, LLC NMLS ID# 1427381 | BR Tech Services, Inc. NMLS ID #1743443 |
|

(c) 2023 Bankrate, LLC. The Red Ventures company. All Rights reserved.

For more on online same day funding payday loans (payday-qw.ru) have a look at the web page.