car bankruptcy consumer bankruptcy
Can I keep my car if I file bankruptcy?
Under Chapter 13, debtors must repay the entire car loan if they bought a car within 910 days (two and half years) of the bankruptcy filing. For example, if you had an outstanding balance of $5000 on a car loan whose blue book value was only $3000, you would be required to pay the entire $5000 balance (assuming you want to keep the car) if the car was purchased less than 30 months of filing. In short, debtors who want to keep their cars must pay the full loan amount, rather than “strip down” the debt to just the value of the car.
Cars are also harder to redeem in Chapter 7 cases, since the law now requires paying the lender the retail replacement value of the car. That value is generally higher than the private sale value that was commonly used under prior law. It remains possible for a debtor to surrender a car when keeping up the payments will be impossible.
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