Bankruptcy is one of the most well-known and least-understood debt-relief options. In Kentucky and across the country, a Chapter 7 bankruptcy filing carries with it no small amount of mystery for the average person, who may not understand how filing for bankruptcy can actually be a positive financial move. One of the most pressing concerns is the concept of repossession, and what assets someone who files can hope to retain.
Chapter 7 bankruptcy is essentially a liquidation process in which an individual's assets are converted to cash and used to pay down creditors. Some assets are protected under bankruptcy law and cannot be liquidated, while others are ripe for liquidation. A personal vehicle can fall into either of these categories, depending upon the value of the vehicle and the filer's unique personal situation.
Generally speaking, if the car is not yet paid off, it might be in the filer's best interest to surrender the car back to the lender. Once the bankruptcy has been discharged, the debtor is no longer responsible for monthly payments of a lease or loan. However, this leaves the individual without a car. If a car is a necessity, one could choose to redeem (pay the lender the entire value of the vehicle at once) or reaffirm (negotiate a payment plan with the lender that allows the car to remain in the filer's possession).
All of these options may sound daunting, and they certainly can be to someone unfamiliar with the bankruptcy process. Thankfully, there are options available for anyone approaching a Chapter 7 filing. With the help of an experienced bankruptcy attorney in Kentucky, the road to financial stability is far more navigable.
Source: autocreditexpress.com, "Can I Keep My Car in a Chapter 7 Bankruptcy?", Megan Foukes, Accessed on May 6, 2018