Dude, What Happens to My Car in Bankruptcy?
Here in the U.S., owning an automobile is a tremendously important thing. But what happens to your car or truck after you file for bankruptcy?
The Arizona Motor Vehicle Exemption
Here in the Grand Canyon State, there is a special vehicle exemption that will determine whether or not you’ll be able to keep your vehicle. Our state laws say that you are entitled to keep $5,000 in equity for your vehicle. That amount is doubled ($10,000) if you’re disabled. In essence, it works this way: if your car is worth $9,000 and you owe $5,000 – you have $4,000 in equity in your vehicle. If the equity were to significantly top the $5,000 equity limit, you may be ordered to sell the vehicle to satisfy a few debts.
Keeping Your Vehicle in Chapter 13 and Chapter 7
Chapter 7 and Chapter 13 are two different species. While Chapter 7 is basically a liquidation form of bankruptcy to wipe out unsecured debt (credit cards, medical bills, etc.), Chapter 13 is more of a reorganization strategy to pay back at least a port of your debts through a repayment plan.
- Under Chapter 13, you can put a halt to repossession thoughts through the automatic stay process, which puts an immediate halt to communication between the creditor and you as well as stopping any procedures already in place against you.
Throughout the life of the repayment plan in Chapter 13, you should be able to pay back the secured loan as well as making good on any missed payments – all while still being able to keep your vehicle.
- In Chapter 7, the key to keeping the vehicle is to remain current on your payments. If you fall even one payment behind, your lender is under no obligation to let you keep it.
Call The Oswalt Group to Make Sure Your Bankruptcy is Done the Right Way
Trust us, bankruptcy is one of those things that you want to get right the first time around. As you can tell from the article above, there’s lots more to consider than merely filing the paperwork for bankruptcy. From knowing what you can keep to deciding which bankruptcy method is right for you, there’s a myriad of reasons to have The Oswalt Group in your corner during this time. If you’re overwhelmed with debt and see no way out, this is the time to call The Oswalt Group for a free consultation. Our number is (602) 225-2222.