Can I Keep My Car After Filing for Bankruptcy?

When filing for bankruptcy, one of the most common concerns people have is whether they can keep their car. For many, a vehicle is essential not just for daily commutes but for maintaining a household, getting children to school, and ensuring job stability. The fear of losing such an important asset can intensify the stress of an already challenging situation. Gertz & Rosen, Ltd. understands these worries and is here to shed light on how bankruptcy can impact your car ownership in Ohio. Our experienced team will provide detailed advice on how you can navigate the complexities of bankruptcy and retain this crucial asset post-bankruptcy, ensuring you have the transportation you need to continue your daily life with minimal disruption.

Chapter 7 Bankruptcy and Car Ownership

Chapter 7 bankruptcy aims to eliminate most debts, such as credit card bills, medical expenses, and personal loans. However, this process involves liquidating non-exempt assets—those your bankruptcy trustee can sell to repay your creditors—which may put your car at risk. Fortunately, some assets are exempt from this liquidation. In Ohio, motor vehicles are exempt up to $4,000 for individuals and $8,000 for married couples filing jointly. If your car’s equity is below the exemption amount, you can keep it during a Chapter 7 bankruptcy. However, the trustee may sell your car to pay your creditors if the equity exceeds this limit.

Chapter 13 Bankruptcy and Car Ownership

Unlike Chapter 7, Chapter 13 bankruptcy involves forming a repayment plan to pay off your debts over three to five years. During this time, you can keep all your assets, including your car – as long as you continue making payments. However, if your vehicle has significant equity and is not necessary for work or essential transportation needs, the trustee may ask you to pay more towards your debt through the repayment plan.

How Can I Keep My Car After Bankruptcy?

One way to keep your car after bankruptcy is by reaffirming the debt through a reaffirmation agreement. This agreement allows you to exclude the vehicle loan from the bankruptcy discharge and continue making payments. However, be aware that this means taking full responsibility for the debt, and any lapse in payments can result in repossession.

Another option is to redeem your car during bankruptcy. This involves paying off the vehicle’s current value in a lump sum, which may be lower than what you owe on it. This option can be viable if you have enough cash or can obtain financing at a lower interest rate.

You may also be able to exempt additional funds towards your car’s equity by using wildcard exemptions or claiming unused homestead exemptions. It’s important to discuss these options with a bankruptcy attorney to determine the best course of action for your specific situation.

Keep Your Wheels Rolling

Ultimately, it is possible to keep your car after filing for bankruptcy, but it depends on various factors such as its equity, exemption limits, and type of bankruptcy. Make sure to meet with a bankruptcy attorney to look over your options and make informed decisions that can protect your assets during the bankruptcy process. At Gertz & Rosen, Ltd., we have over 30 years of experience helping individuals navigate Ohio’s complex world of bankruptcy. Contact us today for a consultation, and let us help you start anew.