How to Include a Vehicle in a Bankruptcy
A decision to file bankruptcy requires thorough calculation and consideration. You need to figure out which debts to include in bankruptcy and which to re-affirm. You can include vehicle loans and leases in bankruptcy and turn the car in to the bank. If you do this, you need another car to drive. If you keep it, you must afford to make payments on it. Make sure you won't need to make costly repairs on the vehicle in the near future.There are steps to follow if you decide to include the vehicle in bankruptcy.
Other People Are Reading
Instructions
-
Car Loan and Car Lease in Chapter 7 Bankruptcy
-
1
Provide the car loan or lease information to your attorney to include it in the bankruptcy petition. You will need the lender's address and phone number. Also, you will need the loan information, such as how much you owe on it and approximately how much the vehicle is worth.
-
2
Call the bank and notify the representative that you are filing bankruptcy and including the vehicle loan or lease. The representative will advise you on what to do next. Each financial institution has a different procedure for repossession.
-
-
3
Turn the vehicle in to the lender. You may need to surrender the vehicle right away or the lender may let you keep it until it receives the notification from bankruptcy court.
Car Loan in Chapter 13 Bankruptcy
-
4
Contact your financial institution and tell the representative that you are filing Chapter 13 bankruptcy. Ask the representative the origination date of your loan. Calculate the length of time in days that has passed since the beginning of your loan.
-
5
Repay your car loan as agreed if the loan is less than 910 days old. Your lender may reduce the interest rate for the repayment balance. Contact the lender to find out what the rate will be.
-
6
Repay the current value of your vehicle if your loan is more than 910 days old. If your vehicle is worth less than the amount you currently owe on it, you may not have to pay the difference. The court will "cram down" your loan, which means it will include the amount equal to the current value in your repayment plan.
-
1
Tips & Warnings
Car lease cannot be included in Chapter 13 bankruptcy. You can either re-affirm it and continue making payments as agreed or include it and surrender the vehicle. The lender will sell the vehicle and apply the sale price to your balance. The difference will be included in your bankruptcy repayment plan, but the court will likely reduce the amount and you will pay only a small percentage of it.
If you are including your vehicle in bankruptcy, you need to have another car to drive for a while. You will not be able to obtain a loan before the discharge. It may be difficult to do so immediately after the discharge.
References
- Photo Credit Jupiterimages/Photos.com/Getty Images
