If you purchased your car less than 910 days before you file for bankruptcy, you are going to have to either keep it and pay for it in full or let it go, there is no in between. If you bought your car more than 910 days ago, then you may be able to pay a reduced amount if you want to keep your car.
Before deciding whether to keep any vehicle, you should do some shopping and think about whether keeping that used car is really your best option. Most people are shocked to learn that walking into a dealership with a Chapter 7 discharge in hand will get you a welcome seat in the finance department. Even a Chapter 13 debtor in a plan can buy a new car with the right documentation from their trustee and/or Court.
The advantages to holding on to a car that is almost paid for are significant, and should not be discounted. But, since most cars are rarely if ever worth more than the balance on the car loan unless they were bought with money down, the economics of driving that used car may point in the direction of replacing it.
Finally, Debtors have to take into account warranty and maintenance costs. There are only a hand few of cars that have the kind of maintenance plans that will outlast a Chapter 13. Tires, Oil, Brakes, and other parts, all come at a cost that few Debtors estimate well when looking at their budget. And, of course, having gone bankrupt a debtor cannot just fall back on “throwing the tires on a card.”
Choosing to keep or surrender a vehicle is an important decision when approaching bankruptcy. Speaking with experienced experts in bankruptcy should be your first step.
This article is written by an attorney at Wyatt & Mirabella, PC. Always consult an attorney before making any legal decisions. To make an appointment today for a free consultation, please contact us by clicking here.