Cars and trucks represent different things to different people. For some, it means freedom, while others have tied their identity to the car they drive. Still, others rightly view their vehicle as a tool they rely on to get their work done or to get them to or from their job, school, or other responsibilities. For all these reasons, their car is one of the top concerns among bankruptcy filers. Here’s what you need to know about how bankruptcy courts approach vehicles.

• If you file for Chapter 7 bankruptcy, it will automatically stop collection calls about your car and put to rest your fears of repossession. An automatic stay makes the continuation of these activities illegal, though your lender can ask the court for permission to repossess the car if you are in default. You can oppose this request, giving you time to cure your default or renegotiate your debt if that is possible.
• If you have equity in your vehicle you may be able to protect it through an exemption. This will depend upon the specific rules of your state, or on federal exemptions. If your equity in the vehicle is less than the exemption amount you’ll be able to keep that amount of value, though that may mean that the car has to be sold in order to pay off creditors and return the exemption amount to you.
• If you do not qualify for Chapter 7 bankruptcy and file under Chapter 13’s rules, you will be able to keep your vehicle and will be provided a three-to-five-year repayment plan that adjusts either the time that you have to pay, the amount that you owe, the interest you are being charged, or a combination of these in order to allow you to pay in a way that is less financially taxing.
• Some bankruptcy filers file a motion with the court to buy their vehicle back from the bankruptcy court for its fair market value. This requires a lump-sum payment but may provide a real benefit to those whose vehicle is worth less than their loan balance.

Filing for bankruptcy is a frightening proposition. There are so many elements to be considered that it is easy to get overwhelmed. For help with the process, contact our experienced bankruptcy firm today to get the guidance that you need.