Will Michigan Bankruptcy let me Keep my car?

One of the largest concerns individuals have when filing bankruptcy is whether they can keep their motor vehicle. We all need to get to work, school, or life. Without the benefits of proper mass transit, many of us demand on our cards. In almost all cases, whether in Chapter 7 or Chapter 13 bankruptcy, you will be able to keep you vehicle.

Michigan bankruptcy and cars or repossession

Chapter 7 Bankruptcy

In a Chapter 7 bankruptcy, the bankruptcy code allows certain amounts for exemptions to protect your property. If you are still making payments on your vehicle, it is likely that the car has a lower value than the total remaining balance. In this case, there is no equity and nothing needs to be exempted. In a case where the car is paid off or the amount owed is less than the value of the car, the equity in the vehicle must be exempted. An experienced Detroit bankruptcy attorney can help guide you through this process.

Car Without a Loan

If you own your car free and clear of any liens, then your car becomes property of the bankruptcy estate. The Chapter 7 trustee would then sell the car for the benefit of your creditors. If, however, you are able to use exemptions to protect the value of the car, the trustee won’t take your car. Most of our clients are able to keep their car by exempting the value of the car if it’s worth more than they owe. www.nadaguides.com is a good place to start when looking to see how much your vehicle is worth in Michigan.

Reaffirming the Car in Bankruptcy

Most motor vehicle creditors will require an individual to sign a Reaffirmation Agreement on the vehicle to be filed with the court. Signing this document essentially puts you in the same position with your obligation as before you filed.  Reaffirming on a motor vehicle is also a useful tool to begin the process of rebuilding your credit. You can also choose to redeem the car by paying the lender the current market value in one payment.

Chapter 13 Bankruptcy

Enrolling in a Chapter 13 plan can allow you to spread out your obligation over a longer period of time up to five years. You may also be able to cram down the value of the vehicle and lower the interest rate in certain situations. Individuals with a vehicle that has a lower value than the amount owed can be benefited by filing a Chapter 13 bankruptcy.

Are you behind on your car payments?

If you are behind on your car payments and at risk for repossession, filing for bankruptcy will generate an automatic stay, which will stop creditors from repossessing the vehicle.  At this point you can discuss with a qualified bankruptcy professional options to keep your car. These options include negotiating with the creditor to get car payments caught up, redeeming the vehicle or treating the vehicle in a Chapter 13 plan  at a lower payment and interest rate.

Was your vehicle repossessed?

Even if your vehicle was repossessed, you can get your vehicle back by filing a Chapter 7 or Chapter 13 bankruptcy if the vehicle has not yet been sold.
If you are considering filing bankruptcy, you will most likely be able to retain your vehicle with the same or more favorable monthly payments.  Our experienced bankruptcy professionals can develop a plan of action to get you best deal possible under the bankruptcy code. Contact us at 248.237.7979 to schedule a free initial consultation.