When facing bankruptcy, a major concern for many is whether they will lose their car—a vital asset for daily commuting, family responsibilities, and overall mobility. Fortunately, whether you keep your vehicle depends on the type of bankruptcy you file and your specific circumstances. Each type, such as Chapter 7 or Chapter 13, has different provisions for asset retention. At Mountain View Law Group, we understand the importance of your vehicle to your personal and professional life, and we’re committed to guiding you through this process with a strategic approach tailored to protect your assets as much as possible.

Types of Bankruptcy: What You Need to Know

When contemplating bankruptcy, it’s crucial to understand the different types that could impact your financial landscape and asset retention. Here’s a breakdown of the two primary types of personal bankruptcy, each with unique implications for your assets:

Chapter 7 Bankruptcy

This type often involves liquidating assets to cover debts. However, you can usually keep your car if its equity falls below your state’s exemption threshold. Utah provides specific exemptions that might allow you to retain your vehicle under certain conditions. Understanding these exemptions is critical, and accessing professional guidance can make a significant difference in protecting your assets.

Chapter 13 Bankruptcy

This category allows you to reorganize your debts and keep your assets, including your car. It can even facilitate the management of overdue car payments by incorporating them into a more manageable repayment plan. Managing Chapter 13 bankruptcy effectively typically requires the proficiency of a bankruptcy attorney in Ogden.

Keeping Your Vehicle During Bankruptcy

When you file for bankruptcy, several factors determine whether you can retain your car. Here’s a closer look at how your vehicle might be affected and the strategies that might help you keep it:

1. Equity and Exemptions: Equity in your car is the difference between its market value and any outstanding loans. If this equity is less than the exemption limit in Utah, your car typically won’t be sold off in a Chapter 7 case.
2. Loan Status: If you’re still paying off your car, reaffirming your debt could be a viable option. This agreement between you and the lender allows you to keep the car as long as payments continue under the established terms. Consult with a Utah bankruptcy attorney to explore this option thoroughly. See how others have successfully managed their bankruptcy proceedings with our firm by visiting our victories page.
3. Strategic Filings: For those whose cars are essential for work or family logistics, Chapter 13 provides a structured way to retain vehicles by adjusting debt obligations into a manageable plan.

Retaining Your Vehicle in Bankruptcy

• Reaffirmation Agreement: By reaffirming your car loan under Chapter 7, you agree to continue making payments, which can help you avoid repossession. This decision should be made with careful consideration of your financial stability post-bankruptcy.
• Redemption Option: This involves settling the car loan for its current market value in one lump sum, potentially reducing your financial burden if the market value is less than what you owe.
• Chapter 13 Adjustment: Known as the ‘cramdown’, this option can reduce the loan amount to the car’s actual value and spread the payments over the term of the bankruptcy plan.

Move Forward to Secure Your Financial Future

If bankruptcy looms and your vehicle is at stake, early professional advice is crucial. Filing for bankruptcy doesn’t automatically mean losing your car. Mountain View Law Group, proficient in Chapter 7 and Chapter 13 cases, offers the guidance needed to understand your options effectively. With our assistance, you can explore legal avenues to retain your vehicle and stabilize your financial situation. Learn more about how we can help on our Attorneys page, and for more personalized advice, contact us today. Let us help you protect what’s essential during challenging times.