How you can keep your vehicle in a bankruptcy

Many of us carry a vehicle loan. When faced with a Chapter 7 bankruptcy, keeping your vehicle needs special attention if it has a vehicle loan associated with it. One of the most common practices is the reaffirmation of the vehicle loan. The debtor can keep the vehicle, however he or she must keep the loan current by making loan payments as scheduled. To start the process, the debtor must contact the lender and inform the pending bankruptcy filing and the intention of reaffirmation. The lender will prepare a reaffirmation agreement for signature of all parties. Once signed the lender will file copies with the court and a judge needs to approve it. But if the lender is a credit union, no approval from a judge is required.

Also the debtor can surrender the vehicle with its loan. Even if the loan balance is higher than the current value of the vehicle, it can be discharged under the bankruptcy.

If the vehicle has no existing loan and fully paid off, you can keep the vehicle by listing it as an asset and cite the exemption in the bankruptcy documents. It is better to get help from a bankruptcy attorney.