Surrender, Reaffirm or Redeem?
Filing for Chapter 7 bankruptcy? This is your chance to get the debt relief you’ve long awaited for and have a fresh financial start moving forward. While it may feel like your world is turned upside down, you have more to look forward to than to dwell on.
Despite the financial freedom and peace of mind you can gain from filing for Chapter 7 bankruptcy, many people are concerned about protecting their car. Depending on whether you can afford your car and its monetary value, you may be able to keep your car when filing for Chapter 7 bankruptcy.
Generally, there are three options to select from when deciding what to do with your vehicle:
Reaffirm: You can enter a reaffirmation agreement with your lender that outlines your intention of keeping your car and your ability to continue making payments on it. This option allows you to keep your existing loan terms in place as if you never filed for bankruptcy.
A court will typically require you to prove that your vehicle is necessary for your survival and that making your car payments won’t put undue hardship on your family.
Redeem: You can pay the value of your vehicle’s current market value in a lump sum payment, which essentially means you’re buying your car back from your lender. However, this poses issues for many people filing for bankruptcy because they typically don’t have large sums of money sitting around.
Surrender: If your financial situation prohibits you from making your car payments, you can give your vehicle back to your lender, or surrender it. This option involves your lender repossessing your car and selling it allows you to eliminate or reduce your vehicle debt.
Your lender can either wait until you file for bankruptcy to repossess your car or file to lift the automatic stay that prohibits collectors from going after debtors who declared bankruptcy.
Need Help Deciding the Best Option? We Can Help!
At White Law PLLC, our bankruptcy lawyers can assist you with Chapter 7 and Chapter 13 bankruptcy, including reviewing your vehicle options. We understand that your car is an essential part of your livelihood, and will explain how surrendering, redeeming and reaffirming your vehicle can impact your case and future.
Depend on our bankruptcy attorneys to provide the honest, strategic legal counsel you need. Call (517) 316-1195 to learn more.