If you file for bankruptcy your car may be exempt from property seizure depending on state law and the value of your car. However if you have a car loan you may still be required to continue making payments on the loan even after you file for bankruptcy.
If you can’t afford your car payments and you file for bankruptcy you may be able to keep your car by reaffirming the loan. Reaffirming means you agree to keep making payments on the loan and to uphold the original terms of the loan agreement even though you’re now bankrupt. You must sign a new loan agreement with the lender to reaffirm the loan.
If you decide not to reaffirm the loan you can still keep your car by continuing to make payments. But if you stop making payments the lender can repossess your car.
If your car is worth less than the amount you owe on the loan you may be able to “cram down” the loan to the value of the car. This means you would only have to pay the lender the value of the car not the full amount of the loan. Cramming down a loan is only an option in Chapter 13 bankruptcy not Chapter 7.
In a Chapter 7 bankruptcy you may be able to keep your car if you can exempt the value of your car from your bankruptcy estate. Each state has different exemption laws so you’ll need to check with your state’s exemption laws to see if your car is exempt.
If your car is not exempt and you want to keep it you’ll need to reaffirm the loan or continue making payments on the loan. If you can’t afford the payments you may have to give up the car.
Can you file bankruptcy on a car loan?
You can but you’ll still owe the lender money for the car.
How does bankruptcy affect your car?
If you file for bankruptcy your car could be repossessed.
What happens if you can’t pay your car loan and you file for bankruptcy?
The lender can repossess your car.
Can you keep your car if you file for bankruptcy?
It depends.
You may be able to keep your car if you reaffirm the loan or if the value of your car is less than the amount you owe on the loan.
What is a reaffirmation agreement?
A reaffirmation agreement is a legally binding contract between you and your lender that states you will continue to make payments on your loan even after you’ve filed for bankruptcy.
What happens if you don’t reaffirm your car loan?
If you don’t reaffirm your car loan the lender can repossess your car.
What is a car worth if you file for bankruptcy?
The value of your car is determined by the lender.
Can you trade in your car if you file for bankruptcy?
You can but you’ll still owe money on the loan.
How do you keep your car if you file for bankruptcy?
You can keep your car if you reaffirm the loan or if the value of your car is less than the amount you owe on the loan.
How does bankruptcy affect your credit?
Bankruptcy will stay on your credit report for 7-10 years and will make it difficult to get new credit.
How long does bankruptcy stay on your credit report?
Bankruptcy will stay on your credit report for 7-10 years.
Will you be able to get new credit after bankruptcy?
It will be difficult to get new credit after bankruptcy.
How can you rebuild your credit after bankruptcy?
You can rebuild your credit after bankruptcy by getting a secured credit card or by becoming an authorized user on someone else’s credit card.
What is a secured credit card?
A secured credit card is a credit card that is backed by a security deposit.
How can you become an authorized user on someone else’s credit card?
You can become an authorized user on someone else’s credit card by asking them to add you to their account.
