Cars- Do I keep them or give them up after Bankruptcy

The good news is that you have the choice to keep your car or not.  If you own it outright then you can exempt it and keep it with no problems.  If the car is financed then you have a choice to return the car and owe no money or keep it.

If you decide to keep a financed car then you can continue and pay the payments after the Bankruptcy and the finance company probably won’t pick it up.  According to a 2009 court case from the 9th circuit the finance company can pick up the car if you don’t sign a reaffirmation agreement.  The reality is that they usually don’t pick up cars even without a Reaff. if you are on time with the payments but my clients don’t like the possibility being out there that they can  lose their car.

 A reaffirmation agreement is a new contract you sign where you agree to once again become liable for the car debt that was just discharged in your bankruptcy.   You can easily end up in bankruptcy court to explain to a judge why you want one of these.  Judges don’t like them but my clients often insist on them.   Discuss the decision of whether to sign one of these carefully with your Bankruptcy attorney.  I’ll discuss Reaffirmation agreements in more depth in a later blog.

But the happy news is that you decide whether to keep your car after a bankruptcy and the creditors must accept your decision.

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