One of the primary concerns people have about filing for bankruptcy is whether they will be allowed to keep their assets, such as their vehicles. Your bankruptcy attorney can give you advice for your specific circumstances; however, you may find it comforting to know that many people do indeed maintain possession of their cars and other assets. For example, if you’re no longer making payments on the car and its value is below a certain amount, you’ll be able to keep the car.
Filing a Statement of Intention (SOI)
If you’re still making payments on your vehicle, your situation is a little more complex. Your bankruptcy attorney will file a Statement of Intention (SOI) along with your bankruptcy petition. The SOI informs the court what you intend to do with your car. You may decide that it’s easier to simply surrender the vehicle. If you lease your car, you may decide to use the SOI to either reject or assume the lease. If you do want to keep the car, you must continue to make payments to your lender while your bankruptcy petition is pending.
Paying the Lender a Lump Sum
If you have the means to do so, your bankruptcy attorney might recommend maintaining possession of the car by paying your lender a lump sum. This is known as redemption. It enables you to purchase the car at the current value.
Entering Into a Reaffirmation Agreement
If you decide to reaffirm the promissory note on your vehicle, your lender will give you an agreement. This reaffirmation agreement may either have the same terms as your old agreement or you may negotiate new terms that are more favorable for you.
Using the Ride-Through Option
Your lender may allow a ride-through option, which enables you to simply continue to meet the terms of the old agreement. If so, your bankruptcy attorney will not need to negotiate a reaffirmation agreement on your behalf.
Get the answers to your questions about bankruptcy by consulting Cutler & Associates, Ltd. Our bankruptcy attorneys will review your case for free and let you know which assets you may keep after filing for Chapter 7 bankruptcy.