Can You Keep Your Car If You File Bankruptcy in Oregon?
Although it may seem counter-intuitive, there are many situations in which you can keep your car during bankruptcy in Oregon. Some of the factors determining whether you can keep your vehicle include the type of bankruptcy, the value of your car, the amount you owe on it and the policies of your specific trustee in Oregon. As bankruptcy law changes frequently, you or your attorney should verify current Oregon bankruptcy statutes before filing.
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Chapter 13 Vs. Chapter 7 Bankruptcy
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If you file a Chapter 13 bankruptcy you do not have to worry about the value of your car. As with all possessions in a Chapter 13, you are entitled to keep your car as long as you make payments to your creditors in accordance with a court-approved plan. With a Chapter 7 bankruptcy, you do not have to make creditor payments but may have to surrender certain assets. Oregon has state-specific exemption levels to help you protect your assets, but if you exceed them, your bankruptcy trustee may liquidate those assets.
Oregon Vehicle Exemption
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In the State of Oregon, you are allowed to protect a motor vehicle up to $2,150 in value. For bankruptcy purposes, the value of a motor vehicle is its current sale value less any amount you owe on it. If you own a $50,000 car but still owe $49,000 on it, your car is protected from liquidation under State of Oregon exemptions. However, if you own a $4,000 car that is all paid off, it may be subject to sale by the bankruptcy trustee.
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Trustee Buy-Back
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If your bankruptcy trustee decides that your car is worth pursuing as a non-exempt asset, you may still have some options. Many trustees will offer to sell you back the car if you can pay the non-exempt amount. For example, if your car is with $3,150, you have $1,000 in non-exempt equity according to the State of Oregon vehicle exemption of $2,150. If you can pay the trustee the $1,000, she may allow you to keep your car.
Reaffirmation
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Although the court may not seize your car in a bankruptcy proceeding, your creditor may if you still owe money on the car. One way to avoid this is to reaffirm your payment contract with the creditor. If you reaffirm your car payment, you get to keep your car but are not allowed to discharge the debt in bankruptcy.
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