Can I Keep my Car in a Bankruptcy Case?
In Colorado, a person can exempt $5,000.00 of equity in a car or cars from the bankruptcy estate in a Chapter 7 case. A married couple filing jointly can exempt up to $10,000.00 of equity in a car or cars in a Chapter 7 case. This means is that you can keep the car(s) you have when the case is filed, so long as you do not have more than $5,000.00 ($10,000.00 for a couple) of equity in them. People can keep leased vehicles, so long as you are not seriously behind with payments when the case is filed.Secured creditors such as your car lenders(s) do have a right to regular payments in a chapter 7 case. If you are seriously behind on your car payments, it may still be possible to keep your cars by filing a chapter 13 case. In a chapter 13 case car payment arrears can be paid through the plan.
While persons can and often do keep their cars in bankruptcy, if you owe more than the car is worth it is almost always a good idea to surrender the car. If you surrender your car, you can walk away from the loan and you will not be liable for any more car payments. Because you can not file bankruptcy again for eight years (Chapter 7 cases), you become a better credit risk than many persons and will be able to finance a new car despite the fact that you have filed for bankruptcy.
Preparation is the key to success in any type of legal matter. We have the bankruptcy experience necessary to prepare your case quickly and get it done right. There are many options for keeping your vehicle(s) or getting rid of them and the associated loans in bankruptcy, but you should speak to a lawyer before making these decisions.
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