Making the decision to use Chapter 7 bankruptcy for relief from your debt can be a good solution for you, but you should analyze the effects it will have on you before you file. As you do this, one thing you should look into is the effects of filing for Chapter 7 will have on your car. If you own a car, this is an important step to take, as there is a chance you could lose your car after filing.
The first thing you should know about this branch of bankruptcy is there is a trade-off. In exchange for the discharge of your debts, the court can seize assets you own. This includes cash on hand, your next tax return check, your house, and your car. The good news is that you will know before you file what assets you will lose, and you can factor this into the equation as you decide whether or not to go through with it.
The Factors that Matter When It Comes to Your Car
When it comes to your car, there are several factors the court will evaluate when deciding whether you can keep your it or not. The first thing the court considers is whether you have a loan on it or not. If you have a loan on it, are you up-to-date on the payments? If you are behind on the payments, you may have no choice but to give the car up. If you are caught up on the payments, the court will look at the amount of equity you have in the car.
In Chapter 7, the court will only seize assets if there is a chance they can make money by liquidating the assets. If you do not have a large amount of equity in the car, there is no reason for the court to take the car to sell it. Additionally, states have rules that protect people when filing for Chapter 7, and these rules allow people to keep cars if they meet the conditions of the state.
States view cars as essential assets. In other words, you need a car to get to and from work, and therefore you will be allowed to keep it, as long as you do not have too much equity in it. Before you decide to file for Chapter 7, you should find out how it would affect your assets. You can do this by contacting a bankruptcy law firm in your area to set up a consultation visit with a bankruptcy attorney.