We’refiling Chapter 7 ourselves butwe aream stuck on what to do about a vehicle loan, how should be handle this in the paperwork?

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We’refiling Chapter 7 ourselves butwe aream stuck on what to do about a vehicle loan, how should be handle this in the paperwork?

My husband is the guarantor on loan for a 10 year old truck that he uses for work purposes and makes the payments on, which are current. Our daughter is the main signer on the loan. Confused on how to go about completing right forms. We need to keep the truck. Do we reaffirm? Or what? Not a whole lot of information regarding this particular issue. And I did put the truck as an exemption (for automobile and tool of trade). Is that going to fly?

Asked on January 6, 2012 under Bankruptcy Law, Ohio

Answers:

Michael Duffy / Duffy Law, LLC

Answered 9 years ago | Contributor

If you have an available applicable exemption, and you'd like to use it for the truck, it's certainly an option. Whether or not it's also a tool of the trade is tricky. Different courts have interpreted that term's applicability to vehicles in a variety of ways. At least it would have to be for a primarily commercial purpose. Some courts might require that it be specially adapted for the trade. It's just an issue of the bankruptcy coruts in your area. A local bankruptcy attorney might be able to offer advice specific to your facts and jurisdiction.

In terms of reaffirming the loan, you would need the lender's agreement. It's something to seriously think about, as after reaffirmation you'd be responsible for that debt - remember, you can't file a Chapter 7 again for at least 8 years, so if you encounter difficulty making payments on that reaffirmed debt during that time the lender would have every legal recourse avaialble. If your daughter's credit is good enough, the lender might also let you just put it solely in her name.


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