If I file bankruptcy, what happens to the vehicles that I am making payments on?

Get Legal Help Today

 Secured with SHA-256 Encryption

If I file bankruptcy, what happens to the vehicles that I am making payments on?

Asked on November 3, 2014 under Bankruptcy Law, California

Answers:

S.L,. Member, California Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

If you are filing Chapter 7 bankruptcy, you can either keep the vehicles and continue making payments by reaffirming the debts by including a Statement of Intention in your bankruptcy.  You also mail a copy of the Statement of Intention to your lender.  When reaffirming a debt, the terms of your payments are negotiable and your lender might offer you a better deal than you currently have.

If you decide to surrender the vehicles to the lender, this is called redemption.  You will need to file your Statement of Intention with your bankruptcy and mail a copy of the Statement of Intention to your lender.  This clears you of further liability on the debt after your bankruptcy.

If you are leasing the car, you can get out of the lease by rejecting the lease on your Statement of Intention.

Another option is to keep the car through redemption by paying the trustee a lump sum for the current value of the car, not the amount you owe on your loan balance.  Due to depreciation, the current value of the car may be considerably less than the amount you owe on the loan.

If you are filing Chapter 13 bankruptcy, you will have a plan (budget) for repayment of your creditors.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

 Secured with SHA-256 Encryption