Will I Lose My Car if I File Bankruptcy in Fulton?

Although you might be concerned about losing your car in bankruptcy, you do have options for keeping it in your possession.

Now, if a creditor has a judgment against you, your car could be taken in order for the claim to be paid. However, once your Fulton bankruptcy attorney files your case, the vehicle is protected from creditors. In other words, with your bankruptcy filed, using a judgment as a method of collecting on a debt is no longer viable.

Bankruptcy Protection

Of course, there are several considerations in determining if your car can be protected. For instance, if there is any money still owed on the vehicle and, if so, what the balance is. In addition, the status of payments is important. A common misconception is that bankruptcy is a perfect solution, when in reality, being behind on payments could lead to repossession.

For instance, if your Fulton bankruptcy lawyer filed Chapter 7 and you are not current on car payments, the vehicle will be repossessed by the lender. Therefore, prior to and following the filing of bankruptcy, you need to bring payments current. In comparison, if a Chapter 13 bankruptcy is filed, you will have the opportunity to catch up on payments.

Car Valuation

Something else that you and your Fulton bankruptcy attorney will need to discuss is the value of your car. If a loan exists, you may be required through the court to use the dealer valuation or get a valuation from an expert for the specific type of vehicle. On the other hand, if there is no loan against the car, the valuation could probably come from trade-in or private party information.

Once the value is determined, any amount owed is deducted. With that, the equity in the vehicle is calculated. For instance, if your car is valued at $15,000, but you still owe $8,000, the amount of equity is $7,000.

Home Value

Even the value of your home needs to be determined, along with outstanding balance for any mortgages. While you might find it strange that information on your home is used when trying to salvage your car, this actually helps the court determine if payments can be afforded, if applicable.

In New York State, someone filing for bankruptcy can choose state or federal exemptions. While the concept is much the same, exemption rights are different. By choosing New York State exemptions, up to $75,000 of home equity can be protected for each client. This means that if you and your spouse are co-owners of a home, the total amount of protected equity is $150,000. With federal exemptions, only $22,000 of home equity can be protected for each client.

As your Fulton bankruptcy lawyer will explain, just $4,000 is allowed for a car exemption in New York. However, if you are not currently a homeowner or you are but the amount of equity is minimal, the $22,000 of federal exemptions can be used to protect your car, as well as other assets. In comparison, if the amount of equity in your car is $7,000 and you have to use state exemptions, protecting the vehicle in bankruptcy will be extremely difficult.

Ultimately, the trustee decides if the car will be taken by the court, sold, or if the money from selling the vehicle will be given back to the lender. In some cases, a trustee will allow you to purchase the car back. For that deal to go through, money has to exchange hands quickly. Because there are many factors involved with bankruptcy, you need to start by hiring the best Fulton bankruptcy attorney possible. Only then will all your questions be answered and the right course of action for salvaging your car be determined.

Call us today at (315) 326-3298 to schedule your initial consultation.

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