Chapter 7 bankruptcy is also known as """"liquidation."" This means that through the Chapter 7 versus Chapter 13 bankruptcy process, you are requesting that the court discharge all unsecured debts. This includes credit cards, medical expenses, and personal loans. If you have a vehicle loan, this is considered a secured loan, as the loan is backed by collateral.
If you have an auto loan at the time you file for Chapter 7 bankruptcy, you should consult with your attorney to determine whether it is best to retain the loan or to discharge the debt. There are essentially four car loan scenarios to consider: redemption, reaffirmation, ride-through, and surrender. Your attorney can advise you on the best option for your situation.
Let's discuss briefly the four options:
Redeem
You have the legal right to redeem your automobile under bankruptcy law. This means that if your auto loan balance is, for example, $12,000 but the vehicle is only worth $7,000, you have the option to refinance for a lower balance.
Reaffirm
You have the legal right to reaffirm your existing law as a result of the bankruptcy laws. This is a legal document stating that your automobile payments will continue as usual. The reaffirmation documentation states that the lender has the right to repossess your vehicle if you default on the loan for any reason. You are responsible for paying the difference between the price at which the lender sells the vehicle and the remaining balance on your loan.
Ride-Thru
Ride-through refers to the continuation of the current loan terms. With this option, there is no legal document reaffirming the loan. According to the law, you will no longer receive statements because the lender cannot reach you regarding this debt. Therefore, you will be required to act responsibly and make payments on time and as usual, without notice. If not, you risk having your vehicle repossessed.
Surrender
Surrender is the decision to return the vehicle to the lender as one of the dischargeable debts under Chapter 7 bankruptcy. The lender will sell the vehicle for whatever amount they can obtain, and the remainder of your obligations will be forgiven.""
" - https://www.affordablecebu.com/
