What Happens to My Car When I File Bankruptcy?

What Happens to My Car When I File Bankruptcy? "The impact of bankruptcy on a debtor's vehicle depends on whether the vehicle was leased or purchased, as well as which chapter of bankruptcy was filed. If the vehicle was leased, the debtor must decide whether to assume the lease or not. By assuming a lease, the debtor is obligated to continue making payments to the lessor in accordance with the provisions of the agreement; in exchange, the debtor is permitted to continue driving the vehicle. Refusing a lease means that the contract is no longer enforceable against the debtor, but the vehicle must be returned to the lessor. Both Chapter 7 and Chapter 13 bankruptcy proceedings have the same effect on leased vehicles.Purchased by the debtor and used as collateral for loans, vehicles are handled differently dependent on the chapter of bankruptcy the debtor filed. In Chapter 7 cases, the debtor must decide whether to surrender the vehicle and discharge the debt, reaffirm the debt, which allows them to keep the vehicle but binds them to a new contractual obligation that survives the bankruptcy discharge, or redeem the vehicle, which involves paying the lender an amount equal to the vehicle's value in exchange for full satisfaction of the lender's claim.In Chapter 13 bankruptcies, the debtor may continue making payments directly to the lender in accordance with the terms of the original contract or include repayment of the secured loan in their Chapter 13 plan. Sometimes, including repayment of the claim in the plan has advantages, such as the ability to reduce the payout to an amount equal to the value of the collateral, reduce the interest rate, and extend the time to pay off the claim, which may result in a reduction of the monthly payment. However, including a secured claim in a Chapter 13 plan is not without risk. Under the plan, the creditor may receive less per month than under the contract. If for some reason the bankruptcy fails, the debtor may be required to pay a large sum of money to bring the claim current under the original contract or risk losing the vehicle. Each option has distinct procedural and legal requirements that should be thoroughly discussed with a bankruptcy lawyer.
" - https://www.affordablecebu.com/