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Your Car and Chapter 7 Bankruptcy in Columbus

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Before filing for Chapter 7 bankruptcy in Columbus, many people wonder how it will affect their assets, such as a motor vehicle. If you are not making payments on a car, you will be in a position to keep the vehicle as long as it is valued at less than your state’s vehicle exemption amount.

On the other hand, the process of filing chapter 7 bankruptcy in Columbus, Ohio becomes much more complex if you are making payments on the vehicle. In this case, you will be faced with a big question: do you want to continue making payments as a means of keeping the vehicle, or would you rather hand it over?

When filing your Statement of Intention (SOI), you will let the bankruptcy court know what you want to do.

1. Walk away from the car.

If you file Chapter 7 bankruptcy and want to walk away from the car, you can state your intentions with the court and turn it over to the lender. This will ensure that you are no longer required to make payments after your bankruptcy is finalized.

2. Keep a car that you are paying for.

Do you have a car that you are making payments on? If so, you can continue to make payments during the bankruptcy process. You will eventually be faced with a choice:

  • Enter into a reaffirmation agreement with the lender, allowing you to keep the vehicle with similar terms as your previous loan
  • Pay the lender one lump sum, allowing you to purchase the car based on its current value

3. Negotiate with the lender to keep your car.

If you decide you want to keep your car, it is time to contact your lender’s bankruptcy department to learn more about your options. This is when you will explain that you are filing bankruptcy. At that point, you can discuss if a reaffirmation agreement is required or if you can simply continue to make payments

Do you have Questions?

With so much gray area for car loans chapter 7 bankruptcy handling, this is a detail to discuss with your Columbus bankruptcy attorney before filing. You don’t want to think one thing about your car, just to find that another is true. We can help you better understand how your car will be treated in Chapter 7 bankruptcy in Columbus.