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Bankruptcy Law

Can bankruptcy stop collections and help you keep your vehicle?


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Wiki User
2011-09-12 15:14:14
2011-09-12 15:14:14

You heard 1/2 the truth. IF what you heard was completely true, EVERYONE would do the B/K deal and get FREE cars. One time at least. No candy for you.

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Chapter 13 bankruptcy can help a person by saving them from legal actions from debt collectors. When a person files bankruptcy, all debt collections and lawsuits are stopped so a person can keep their assets like homes or cars.

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No. But they can ask to be excluded from the bankruptcy. Usually a deal can be made with the lender to keep a vehicle. If it is covered by the exemption and the borrower lives up to the contract agreement.

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Probably yes. The reason for the "probably" is that you don't file bankruptcy on specific loans... you file bankruptcy in general, and it applies to most debts (there are certain types of debts that are not dischargable in a bankruptcy). Note that if you do file bankruptcy, you may have to sell the vehicle. In bankruptcy you are often required to sell certain assets in an attempt to at least partially pay off your creditors; you're allowed to keep a certain amount of equity in a vehicle specifically, and a certain amount in "general assets" (which can be applied to a vehicle or to cash or other personal property), but if the vehicle is worth more than that, you would have to sell it.

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You can only keep the vehicle under two circumstances: (1) sign a reaffirmation agreement and keep making payments; or (2) redeem the vehicle by paying of the balalnce. If you fail to do either, they lender can get permission from the bankruptcy court to repossess the vehicle. In some states, such as Missouri, you may keep the vehicle if you continue to pay on it.

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If you're auto payment is included in your bankruptcy, then yes, they will require you to keep full coverage as long as there is a secured balance on the vehicle.


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