Troy, Ohio Bankruptcy Attorney discusses automobiles and bankruptcy

One of the challenges faced when filing bankruptcy is dealing with automobiles. This is even more challenging when a couple is filing joint bankruptcy and they owe money on one or more automobiles. Because it is important to understand just how to deal with cars, a Troy, Ohio Bankruptcy Attorney explains the various options.

When you owe nothing on the car

Bankruptcy-Code

Reaffirmation agreements in bankruptcy

When you file for Chapter 7 bankruptcy, the trustee may consider liquidating some of your assets in order to pay your debts. Fortunately, there is an exemption for your motor vehicle that is just under $4,000. For joint bankruptcy, this exemption may be doubled. However, it is important to note that your name must be on the title and if you are filing a joint bankruptcy, both spouses names must be on the title. If you own two vehicles, the trustee may “force” the sale of one in order to pay off other debts.

When you owe money on the car

There are two scenarios what may occur if you owe money on your vehicle and are going through a Chapter 7 bankruptcy. Both are slightly complicated and are:

  • Reaffirmation of debt – you basically reaffirm the debt and agree to make all payments on your car in spite of the bankruptcy
  • Redemption – in this scenario, you will need the assistance of your creditor. As a debtor, you offer to pay for the vehicle at the current market value. If the creditor accepts these terms, then you will be able to keep your vehicle and will owe nothing more

Possible exclusions and options

Keep in mind that bankruptcy laws offer debtors some protections. There are some possible exclusions and additional options when dealing with vehicles. Some of these include:

  • Use for employment – for those who use their vehicle for employment purposes (e.g., salesman, trucks for landscaping, etc.) there is an option to keep your vehicle
  • Assistive equipment – if your vehicle is specifically designed to assist you with mobility due to a disability, you may also claim an exemption
  • Wildcard combination – if you have two vehicles, you may be able to use your “wildcard” exemption to protect the second vehicle

Bankruptcy law is very confusing and if you have one or more motor vehicles you may be even more confused. Instead of trying to figure out if you can keep your car (or cars), it’s a good idea to contact Chris Wesner Law Office, LLC for help. We can help make sure you understand what options are available to help you keep your car.

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