I Filed for Chapter 7 Bankruptcy in Florida: Can I Keep My Car?
Many people believe that Chapter 7 bankruptcy results in the liquidation of all of one’s assets. This is not always the case, however. Below is an overview of some of the options available to prevent the liquidation of one’s personal vehicle when filing for Chapter 7 bankruptcy.
Cars without Loans
When a debtor in bankruptcy owes no money on his or her car, the value of the vehicle becomes the bankruptcy estate’s property. However, in order to protect certain kinds of property from liquidation by the Chapter 7 trustee, bankruptcy law permits debtors to exempt certain items from the estate. Both state and federal exemptions permit debtors in bankruptcy to protect a certain amount of value in a car, and when a debtor is able to exempt the entire amount of the same, the Chapter 7 trustee must refrain from its liquidation. Also, when substantial nonexempt equity remains in a car, the debtor in bankruptcy has the option of turning the vehicle over to the trustee, who will then sell it and pay the debtor for the exemption. In addition, the debtor can simply pay the trustee the nonexempt equity amount and keep his or her car.
Cars with Loans
When a debtor in Chapter 7 bankruptcy owes money on a car, he or she has the option of reaffirming the debt, which allows the debtor to continue making payments and keep the car. When a debt is reaffirmed, the debtor agrees to continue making payments via a reaffirmation agreement in exchange for keeping the car. When a reaffirmation agreement is executed and a bankruptcy discharge is obtained, the debtor must abide by the agreement and remains liable for the debt. In order for a reaffirmation agreement to be approved, it is usually necessary for the debtor to demonstrate to the court that the vehicle is needed and that the accompanying payment will not result in an undue hardship. An additional way in which a car that has not been paid off may be retained by a debtor in bankruptcy is via redemption. Redemption is a process by which the debtor, upon approval by the court, pays the car lender the market value of the car in a lump sum.
Florida Bankruptcy Attorneys
Chapter 7 bankruptcy provides debtors with a way to begin rebuilding their financial futures. However, it can sometimes be difficult to determine which property must be liquidated and which items may be retained. Therefore, if you are considering filing for bankruptcy in Florida, please contact the Law Offices of Jeffrey A. Herzog, P.A., to discuss your situation. Our experienced Florida Chapter 7 and Chapter 13 bankruptcy attorneys will walk you through the bankruptcy process while ensuring that you understand all of your legal options. Please contact us for a free consultation.