What to do if my husband and I are filing for bankruptcy and currently have a car loan?

UPDATED: Aug 5, 2013

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What to do if my husband and I are filing for bankruptcy and currently have a car loan?

We owe $19,000 left on the car but its only worth about $13,000. I don’t know if it’s worth trying to keep the car or get rid of it and try for a loan after the bankruptcy. We pay $619 a month with a 19% interest rate. I was also considering a redemption loan but I’m not sure how hard it would be to get one of those loans and what kind of monthly payments I would be facing.

Asked on August 5, 2013 under Bankruptcy Law, Colorado


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Your interest rate on the car is very high and the car is underwater on value, both of which would tend to argue for not trying to keep it and letting the bankruptcy discharge the debt. It may be very hard to get a loan or financing post-bankruptcy for a car, so you may need to resign yourself to getting a much less expensive  vehicle--such as an 8 - 10 year old used car--in order to reduce what you'd need to a level you could qualify for.

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