Whether you file for a Chapter 7 or Chapter 13 bankruptcy, it’s important to protect your assets. Working with a bankruptcy lawyer will help you protect assets as you eliminate and reduce your debt. For most debtors, one of the most important assets to protect is their car, as their vehicle is the basic means of transportation to work and everywhere else. Keeping your car during bankruptcy is technically a knotty issue, since you will likely have to sign a reaffirmation agreement. Fortunately, a St. Petersburg bankruptcy lawyer can greatly simplify the process for you.
Protecting Your Assets in Chapter 7
Remember, everything you own is technically included when you file for bankruptcy. But through exemptions and the help of a bankruptcy lawyer, you can protect your most valuable assets. Because your car has many benefits – such as transporting you to work, which will help you repay any outstanding debt – this one asset you can’t afford to ignore.
When you file for a Chapter 7 bankruptcy, creditors will begin liquidating assets in order to reimburse debts that have been discharged. Unless you are able to protect your vehicle under bankruptcy exemption laws, the car will be repossessed – and you will still be liable on the remaining balance even after the car is sold! However, signing reaffirming your debt or signing a reaffirmation agreement on your car will protect it from a Chapter 7 filing.
What this means is that you agree to continue making monthly payments on your car loan in the midst of the Chapter 7 bankruptcy. Once you sign the agreement, it’s important to stay on top of your payments and avoid breeching the agreement, as creditors could use that as grounds to come after your vehicle. Working with your bankruptcy lawyer during every step of your Chapter 7 filing will ensure that you reaffirm debts associated to the vehicle and any other assets that you want to keep. If you decide to file for a Chapter 13 bankruptcy instead, you can still protect your car and receive more favorable interest rates on your remaining balance.