Do I have to give up my vehicle in a Chapter 13 Bankruptcy?

 Posted on July 29, 2019 in Uncategorized

The simple answer here is, no. If you are current on your car payments, the Chapter 13 typically has no effect on your car. You simply continue to make your car payments directly to your car lender. If you are behind on your car when you file bankruptcy, read below on how to keep your home in Chapter 13 Bankruptcy:

Chapter 13 Bankruptcy is a repayment and reorganization plan. The type of person who files a Chapter 13 Bankruptcy is someone who is behind on a house, car, IRS payments, etc. and wants to keep the collateral and repay the amounts that are past due.

In order to keep your vehicle through a Chapter 13 Bankruptcy you will need to be able to at minimum have sufficient income to repay the amount that is owed on the vehicle plus interest at the LIBOR rate plus 2%. Further, the Chapter 13 Trustee the person who collects and disburses your payments to creditors, charges a fee set by the Court of 10% of each one of your payments. This effectively makes the interest rate around 15% on the outstanding principal balance.

The simple answer here is, yes, a Chapter 13 Bankruptcy can help you retain your vehicle if you are facing repossession. A Chapter 13 Bankruptcy can even help you retrieve a vehicle from a Creditor who has already repossessed your vehicle. There are other factors to consider when calculating what you would need to repay through your plan in addition to your vehicle and whether or not you can afford to make those payments and retain your vehicle. For a more in depth analysis you can call our office and one of our attorneys will meet with you to help determine what options you have to retain your vehicle.