Unless you live in central New York, you can’t survive your living without a car. A car becomes a necessity. If you want a job, to be in the job, to drop your kids to school, picking them back from the school, shopping and other outings, a car is very much a necessity. Even for a lighter side, to meet your girl/boy friend, to date with them you got to have a car.

So, car plays a great role in an American’s daily life. When life goes cool, the car goes cool. But what about a debtor filing for Chapter 7, what if the company announces Chapter 13 bankruptcy? If an employee had bought a new car, can he/she keep the car? If they do want to keep it, how can they? Since not everybody will have enough funds, a majority of employees purchasing a car purchase it through loan. So, if the car has a loan, and the debtor cannot afford to pay back and files for bankruptcy, it is natural that the creditor will demand the property back.

Understanding the Chapters
Before going further let us understand what this Chapter 7 & Chapter 13 of United States Law book is. (Readers who are well versed with these topics can continue from the next Paragraph)

  • Business Filing Chapter 7 (Courtesy: encyclopedia): When a troubled business is badly in debt and unable to  service that debt or pay its creditors, it may file (or be forced by its creditors to file) for bankruptcy in a federal court under Chapter 7. A Chapter 7 filing means that the business ceases operations unless continued by the Chapter 7 Trustee. A Chapter 7 Trustee is appointed almost immediately.
  • Individuals Filing Chapter 7: Individuals can file for bankruptcy when they are badly in debt. In a Chapter 7 bankruptcy, the individual is allowed to keep certain exempt property. The value of property which can be claimed as exempt varies from state-to-state.
  • Chapter 13 (Courtesy: encyclopedia):: Chapter 13 bankruptcy filing is a way for individuals in the United States to undergo a financial reorganization supervised by a federal bankruptcy court. The Bankruptcy Code anticipates the goal of Chapter 13 as enabling income-receiving debtors a debtor rehabilitation provided they fulfill a court-approved plan.

An individual who is badly in debt can file for bankruptcy either under Chapter 7 (liquidation, or straight bankruptcy), under Chapter 13 (reorganization) or Chapter 11, Title 11, United States Code. Debtors may also be forced into bankruptcy by creditors in the case of an involuntary bankruptcy, but only under Chapters 7 or 11. However, in most instances the debtor may choose under which chapter to file.

Is there any way to save your car?
So, is there any way to save your car? Yes, there are few ways to save your car, even if you have a loan. Bankruptcy information says, when a debtor files for Chapter 7 bankruptcy, he/she can Redeem the car by paying the lender the value of the car and discharging the rest of the car loan in bankruptcy. The law (United States) says this way; in a Chapter 13 bankruptcy, a car can also be redeemed if the car loan is (almost) more than two and a half year olds or more than 910 days old or if the loan was not used only for purchasing the loan. (Most of the small level “business men” has this practice of doing this “rollover loan” from a trade-in…). When your vehicle is older than this particular number of days (there is an other chance), the bankruptcy trustee will evaluate and they may allow you to pay a “Fair Price” for the Market Value of the vehicle plus a reduced interest. As the value of the vehicle depreciates as days go there is a chance for the trustee to consider a less price than the original value of the loan.

When there is no cash available for the debtor to pay for the car, he/she is allowed to take a loan to do so. The notable thing is that they are allowed to take loan even in bankruptcy. File for bankruptcy and keep the car!!!

There are few things to be noted in this (Because year 2005 had gone some changes in the bankruptcy law — On October 17, 2005 the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) went into effect.), if you file for bankruptcy and you purchased a vehicle before 910 days you are supposed to pay the price for it (i.e., the entire balance amount along with the interest you owe during the Chapter 13 bankruptcy!). It is almost like you will be dried till the lost drop! But of course, they are not that rude, you can still own your vehicle!

This looks real good, isn’t it? Everything has its own complexity. But one thing should be noted, Chapter 7, Chapter 13 and bankruptcy are the worst case for an individual or an organization. Before being affected by any kind of debt problem it is always better to prepare ourselves for a better situation. Nobody wants to pay more than what it owes, isn’t it? That is what Auto Relief Group provides you. You can pay for what it is worth for. We provide knowledge and support in reducing your auto loans.

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