Chapter 7 Bankruptcy Relief - FAQ

Q.   I have a car. If I file for Chapter 7 Bankruptcy, do I need to give it away?

Not necessarily. If you have a vehicle which is paid off (no loan) and the value of such vehicle is less than $6,000, you may be able to retain it. However, if you have a lien on it (have a car loan) then you have to consider certain factors. First, you have to be current on all your payments, and the equity in the vehicle is not more than $6,000. Your attorney will be in a better position to assess the actual situation after discussing your unique situation.

Q.   What is a Re-Affirmation Agreement?

If you have a vehicle which has a lien on it (car loan) and your still wish to retain this vehicle then you will have to enter into an Agreement with the lien holder (bank). The purpose of the Agreement is to agree that you will still make regular payments on this loan even if you have filed for bankruptcy. In the future if you are not able to make the payments and your car get repossessed, you will still owe the lien holder any deficiency in the loan.

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Q.   Do I have to enter into a Re-Affirmation Agreement if I have a car loan?

No. Entering into the Agreement is completely volunteer in nature. However, if you want to retain the vehicle you will have to enter into this Agreement.

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Disclaimer: Mehnaz Khan, Esq. is a debt relief agency. We help clients file bankruptcy relief under the Bankruptcy Code. Although most of the information contained in this website is legal in nature, nothing herein shall be construed as a legal advice or establishment of an attorney client relationship.

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