May I keep an insurance check on a vehicle whose debt was discharged in a Chapter 7 bankruptcy?

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May I keep an insurance check on a vehicle whose debt was discharged in a Chapter 7 bankruptcy?

My van, which was already in poor condition, was recently hit by a motorist.  About $3500 in damage was done to the rear passenger side. I have been making voluntary payments and keeping possession but now would rather use the insurance check to get another vehicle and return the van. Can I keep the check, or must I fix the van, or do I have to turn the check over to the creditor?

Asked on November 6, 2010 under Bankruptcy Law, Oklahoma

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Ok was the debt really discharged and you are really making voluntary payments?  Or was it reaffirmed and you are now continuing to make the payments? I doubt that the law would allow you to return the van without liability for the damage.  I can not imaging that the creditor would be out of luck for the damage that was involved with the van AFTER discharge, but I could be wrong.  The creditor is allowing you to make the payments and not execute on his right to repossess the van after discharge but I would be hard pressed to say that he gives up his rightto sue you for the subsequent damage.  I would seek confirmation from an attorney in your area.  No one can make this decision for you though.  You have to decide that yourself.


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