Keeping your car after bankruptcy is possible with Chapter 7 or Chapter 13 bankruptcy. Chapter 13 bankruptcy may allow you to stop repossession by forcing the creditor to change the loan payment terms. In addition, if you bought your car more than 910 days before filing Chapter 13, you may be able to force the lender to accept less than the balance owed on the car. When the loan is more than 910 days old, the creditor must accept a payoff equal to the fair market value of the car. This procedure is called “cramming down” the loan. If you purchased your car less than 910 days before filing Chapter 13 bankruptcy, you won’t be able to “cram down” the loan. However, in all Chapter 13 bankruptcy cases you will get five years to pay off your vehicle, at a reduced interest rate.
Chapter 7 cases do not allow you to “cram down” an automobile loan. Instead, you will be required to sign a reaffirmation agreement on the debt in order to keep the vehicle. Reaffirmation agreements require you to keep paying the regularly monthly payments on the vehicle under the terms of the original contract. When you reaffirm a debt, you will be responsible for the debt after receiving a Chapter 7 bankruptcy discharge. Be careful about reaffirming a debt. If the vehicle is repossessed after your bankruptcy, you might be liable for a deficiency claim if you signed a reaffirmation agreement.
The U.S. Bankruptcy Code gives generous bankruptcy protection for retirement accounts. In most cases, the bankruptcy code allows you to protect your retirement plans from the claims of creditors. Most 401k plans, IRAs, pension plans, defined benefit plans, or other forms of retirement accounts are protected from creditors when you file for Chapter 7 or Chapter 13 bankruptcy. Some clients make the mistake of depleting retirement accounts to try to keep making minimum payments on credit cards, medical debts, or other debts. Unfortunately, many clients wind up filing for bankruptcy protection after they have already lost all of their retirement.
Before depleting your retirement account to pay creditors, contact an attorney to find out your options. Most clients are not required to give up any property when they file bankruptcy. This is particularly true in the case of retirement accounts. Although there are some restrictions on the timing of contributions to an IRA or other retirement account, bankruptcy protection for retirement accounts allows you to keep what may be your largest asset after bankruptcy.
Be sure to talk to an experienced attorney about bankruptcy protection for retirement accounts if you are in financial distress. Many financial problems get worse if they are not addressed with a reasonable plan, which should include an evaluation by an attorney. We offer free consultations in most cases, and will help you map out the best course of action.