Can You File Chapter 7 And Retain Your Vehicle?

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Declaring Bankruptcy to Clear the Slate When it comes to great ways to start over, there aren't many options better than declaring bankruptcy. In addition to erasing previous debt, bankruptcy also gets your old creditors off of your back, reducing your stress levels and improving your life. However, many people don't understand the intricacies of working with a bankruptcy attorney, which is why things can get confusing sometimes. On this website, check out great information about declaring bankruptcy so you can decide what is right for your situation. After all, it could really help you to get your health on the right track. Check out these blogs to find out more.



Part of a Chapter 7 filing can involve the loss of certain assets. However, exemptions and other aspects of the case can protect your vehicle and other property from being seized. The chances of losing a vehicle with a Chapter 7 bankruptcy filing depend on several factors, so take a look at those factors and know what you will be facing when you file.

Understand How Exemptions Can Protect Your Assets

Assets that rise above the value of your state exemptions could be in jeopardy in some cases. For instance, if your vehicle is valued at $30,000 and your state allows you to deduct $10,000 from that value, you might still have a problem since you are $20,000 short of retaining the item. However, there is more to consider than that.

In some cases, you can improve your exemption situation by filing jointly. Your spouse must agree to file jointly, and then you can have a doubling of your exemptions. In the above example, that would provide you with a $20,000 vehicle exemption instead of just $10,000.

Some states exempt property and values from assets. For example, some states allow the filer to keep the primary family vehicle regardless of its value. The same might be true for a home, heirloom jewelry, work tools, and more. On the other hand, some states use a certain dollar amount for an exemption.

If you have recently moved to a new state, be sure to discuss your options with your bankruptcy lawyer because exemptions can be affected by your previous state. You must reside in your current state for a certain amount of time to use those state exemptions. However, some states allow some to use the exemptions from their previous state of residence. It cannot be overemphasized how much the exemption situation can affect what property you hand over after you file. You may find your situation totally changed just by waiting a few months to file or by filing as quickly as possible after a move to a new state.

Another point to keep in mind about vehicle exemptions is that a few states give filers the option to use federal exemptions instead of state exemptions. This provides a lot more flexibility in those states although you cannot mix federal and state exemptions.

Finally, consider how much money you owe on an auto loan as part of the equation. The bankruptcy court will have to pay off that creditor if they seize that vehicle. If you owe any money at all, deduct the balance owed from the value to determine the worth of your exemption.

Speak to a bankruptcy lawyer to find out more.

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