How Filing Bankruptcy Could Affect Your Car Loan

If your debt is so extreme that you are considering bankruptcy, losing your car might be a tremendous concern — especially if that is the only way you can maintain your employment and try to get back on track. In the vast majority of cases, you will not lose your vehicle in bankruptcy. If your car has been repossessed, the DiTocco Law Group, PLLC, is not a repossession defense firm. We can, however, relieve you of the financial responsibility associated with a repossession.

At the DiTocco Law Group, PLLC, our focus is on helping you discharge your debts so you can get a fresh financial start. No matter what has transpired for you, we will work to help you get a clean slate.

Options For Keeping Your Car If You File Bankruptcy

When you work with our lawyers to discharge your debt, certain options might apply to your car loan. Under Florida’s exemption statute, you can exempt between $1,000 and $6,000 of equity in your vehicle. The trustee would only be interested in your vehicle if it has positive equity. If that is the case, however, since certain exemptions apply in matters of Florida bankruptcy, there are ways we can help you keep your vehicle regardless of its value.

Bankruptcy filers have three options available to them regarding their vehicle:

  1. Reaffirm the debt: In a debt reaffirmation scenario, you sign an agreement with the lender which states that although you have filed for bankruptcy, you intend to live by the original terms and conditions of the car loan. Therefore, as long as you continue making payments, you can keep the car.
    • However, if you fail to make payments, then the car can be repossessed, and you would be personally liable for the debt. In other words, you are in the same position as you were prior to filing the bankruptcy.
  2. Surrender: In the alternative, you may choose to surrender the vehicle, in which case you return the vehicle to the lender. However, you are completely discharged of any obligations from the vehicle and you can walk away free and clear.
  3. Chapter 13 option: In a Chapter 13, you have the additional ability to cramdown the car loan. This is a complex procedure that requires the expertise of an experienced Chapter 13 bankruptcy attorney.

You will not lose your vehicle in bankruptcy. We can work to either exempt the value or work out a plan to keep it. If Chapter 7 will result in the loss of a vehicle, then we can look at other bankruptcy options.

Get Help Deciding What Is Best For You

No matter your choice about your car loan, making an informed decision is of the utmost importance. For answers to your questions, contact our firm online or call 954-566-9000 to arrange your free initial consultation today.

We provide translation services for Spanish-speaking clients at our Boca Raton offices and throughout Palm Beach, Miami-Dade and Broward counties.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.