What happens to cars in bankruptcy can be a scary thing. Most people simply do not know what to expect when they file bankruptcy. One of many reasons that people file bankruptcy in the first place is that they’ve had a repossession. Another reason may be that they’ve been buried in a car that doesn’t run anymore or that other debt has them unable to make a car payment. One of the primary things people want to know is what happens to their cars when they file bankruptcy in Tulsa. The answer to the question is that it depends on what kind of bankruptcy you file.
Surrender The Car
When you file chapter 7 you have the right to surrender your car in bankruptcy and to stop making the monthly payments. You will be relieved of your obligation under the original note when you receive your discharge in the case. Unfortunately it does mean you have to give up your transportation. This might be more acceptable if you have more than one car and are simply looking to be relieved of some of your obligations.
Do Nothing And Keep Paying
Another option you have is you can do nothing, keep your cars in Bankruptcy and continue making your monthly payments. You will get to keep your car but your payment history will not be reported to the credit bureaus. If you are confident you will engage in good credit practices and you do not owe more than what the vehicle is worth, you may decide to reaffirm your original debt.
Reaffirm Your Original Loan
Reaffirming your original loan means you will enter another agreement with your original creditor. You usually have to agree to pay the amount you owe at the same interest rate. Here you keep your car and make the monthly payments defined in your reaffirmation agreement. The bankruptcy court has to approve your reaffirmation agreement. If your reaffirmation agreement is approved and you make the agreed upon payments you will gain some positive credit history. However, if you owe much more than what the vehicle is worth, it may benefit you to seek a redemption order.
Redeem Your Vehicle
Redemption is when you purchase your vehicle from the original creditor for the fair market value of your car. Some lenders will agree to loan you the fair market value or the redemption value of your car. Once you obtain pre-approval for your car redemption, the lawyers at South Tulsa Bankruptcy Lawyers will file a motion with the bankruptcy court on your behalf. If the motion is granted, your original creditor will be required to accept the fair market value as full payment.
Trustee Can Sell Your Vehicle
Probably the worst case scenario is the trustee assigned to your case compels you to sell your car. In Oklahoma, every debtor in bankruptcy is entitled to a $7500 exemption for their car. However in some cases the debtor’s car is worth much more than the $7500. For example, If your car is worth $17,500 and you do not owe anything on the car, the trustee can claim the difference between the fair market value and your exemption or $7500.00 The trustee will then use the funds to pay back your creditors.
Bankruptcy Law Firm Near You
Filing bankruptcy can be scary. People fear that the worst is going to happen. They may also feel like they’ve got very few options. This is simply untrue. You can file either a chapter 7 or a chapter 13 bankruptcy. In both cases you have options for your vehicles and for your other assets. Call our Tulsa bankruptcy and get a free consultation.
