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Naperville Attorney - Stop Vehicle Repossession

Save Your Car

There are ways to keep your car when you file for bankruptcy. Your car loan and the type of bankruptcy you file will determine which options you can choose.

The courts understand that you need a car for work and to get back on your feet. If you own vintage or luxury cars which are free and clear and worth thousands of dollars, you are probably not going to be able to keep them. If, on the other hand, you have a car worth $10,000 and you owe $8000 on it, you will most likely keep it. Most leased vehicles have no equity and therefore are entirely exempt. If you owe money on your car or it is leased, you must still make the payments.

Further details under Chapter 7:

Will the trustee take the car?

If there is no equity in the car, after subtracting any car loan and the exemptions from the car's present sale value, the bankruptcy trustee will not take the car.

If there is equity in the car over and above the value of the exemptions available, a debtor can usually buy any unprotected equity from the Chapter 7 trustee.(pay the amount of the equity in the car to the trustee and keep the car)

Will the creditor take the car?

If you still owe money on the car, you can choose to reaffirm the debt to the secured lender, keep the car and continue paying under the existing terms; or you can buy the car from the secured creditor in a single payment for its present value (redemption).

If you choose, you can surrender the car and be free of any obligation to pay for it.

Further details under Chapter 13:

Debtors must repay the entire car loan if they bought the car within 910 days (2 and half years) of the bankruptcy filing. For example, if you had an outstanding balance of $5,000 on a car loan whose blue book value was only $2,000, you would be required to pay the entire $5,000 balance (assuming you want to keep the car) if the car was purchased less than 30 months of filing. In short, debtors who want to keep their cars must pay the full loan amount, rather than "strip down" (lower) the debt to just the value of the car.

If your car note is more than 910 days old, you may qualify for a "cram down" procedure where you only pay the current value of the car instead of the full amount of the loan. Even though this doesn't discharge the debt, it could significantly reduce the amount you owe on the note.

Threatened With Car Repossession? Contact Our DuPage County Lawyers

If you are worried about losing your car to repossession, bankruptcy could help you avoid that situation. For a free attorney consultation to learn more, please call 630-296-5084 or contact our Naperville law firm online.

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Linda Bal & Associates serves clients in Illinois cities such as Naperville, Chicago, Itasca, Huntley, Aurora, Elmhurst, St. Charles, Wheaton, Batavia, Algonquin, Bartlett, Woodstock, Arlington Heights, Schaumburg, Bensenville, Addison, Barrington, Palatine and others throughout DuPage County, Kane County, McHenry County, Will County and Cook County.