If your car is about to be repossessed, it can be a terrifying situation. You need your vehicle to take care of your family and to travel to and from work. You are doing your best to earn enough money to catch up the car payments; however, if the lender takes your car, you may lose your job and you will never get caught up on your bills. On the other hand, you may be worried that if you file bankruptcy you will lose your car because it is paid in full. You worked so hard to pay off the lien on the car and it is your only form of transportation so you cannot lose it. The problem is that you have so many debts that you do not have any other alternative but to file bankruptcy. If you need to keep your car, bankruptcy may be able to help you.
What Happens To Your Car If You File Bankruptcy
Under Chapter 13?
Many people who are struggling with debt get behind on their car payments. When you file bankruptcy under Chapter 13, your car loan will be included in your bankruptcy plan. You can stretch out your car payments for another 60 months to lower the monthly payment. In some cases, you may be able to lower the interest rate you are currently paying on your car loan through your bankruptcy plan.
If your car is paid in full when you file bankruptcy, you can probably protect the entire equity in the car by using bankruptcy exemptions. If there is excess equity in your car, you can still keep your car by paying a little more each month to the bankruptcy trustee. In either case, most debtors keep their car when they file bankruptcy under Chapter 13.
What Happens To Your Car If You File Bankruptcy
Under Chapter 7?
When you file bankruptcy under Chapter 7 and have a car loan, you can keep your car if you can afford to continue making the payments on the loan. Filing a Chapter 7 bankruptcy case discharges most, if not all, of your unsecured debt. In many cases, debtors find they can afford to continue making their car payments when they do not have this other debt looming over them.
In the event that your car is paid in full, you will likely be able to protect the entire equity with your bankruptcy exemptions. In a few cases, the equity in a car may exceed the bankruptcy exemptions. When this occurs, you may be able to work out an arrangement with the Chapter 7 trustee to pay him an amount equal to the excess equity in your car. This does not happen in most bankruptcy cases. Most Chapter 7 cases filed in Illinois are no-asset cases meaning the debtors keep all of their property, including their car.
Should I File Bankruptcy?
When considering whether to file bankruptcy, you need the advice of an experienced bankruptcy attorney. Our bankruptcy lawyers have years of experience helping people resolve their debt problems while protecting their property.
Contact Our Office for a Consultation with an Experienced Illinois Bankruptcy Attorney
The bankruptcy lawyers of Pioletti Pioletti & Nichols represent individuals who need help solving their debt problems. We assist clients throughout McLean, Woodford, Tazewell, and Peoria counties by providing compassionate, competent legal services. Contact our office at 309-938-4838 to schedule your free consultation.
When you need the assistance of an experienced bankruptcy attorney in central Illinois, call Pioletti Pioletti & Nichols. We are dedicated to providing our clients with exceptional service and support throughout the bankruptcy process.