If you are struggling to pay your bills, filing bankruptcy is one way to manage or wipe out debt and gain control over your finances. Bankruptcy has many benefits, but you may worry about what will happen to your property during this process.
Fortunately, filing for bankruptcy automatically stops creditors from repossessing or selling your assets. Get advice from an experienced attorney so you understand the differences between Chapter 7 or Chapter 13 proceedings and prevent repossession during bankruptcy in Stal Lake City.
Filing Chapter 7 bankruptcy lets you keep exempt possessions, but non-exempt items will be valued and sold by the trustee to repay creditors. Under Chapter 13, you can renegotiate loans tied to property (a.k.a. secured debts) to lower interest rates or extend repayment terms. And while it seems like a good idea, don’t ever sell or transfer the title to assets, such as a vehicle, into someone else’s name before filing. Complicated guidelines like this are the reason you need a local attorney to explain how repossession is legally prevented during bankruptcy proceedings.
Under Utah law, your vehicle in Chapter 7 is exempt up to $3,000. In other words, you can claim up to $3,000 of equity in an automobile or motorcycle. This exemption protects the first $3,000 from interest from a Chapter 7 trustee. If your equity interest is more than $3,000, you most likely will not lose your car. Instead, you’ll be required to pay monthly payments to the trustee to “buy back” the non-exempt portion of your equity.
While filing bankruptcy can prevent a secured creditor from repossessing your vehicle, you won’t be able to eliminate the debt if the Certificate of Title correctly identifies the creditor’s lien. To keep a vehicle with a lien, you’ll have to submit a Statement of Intention to redeem or reaffirm the debt by:
The Court will lift the automatic stay if you fail to perform as stated in your Statement of Intentions within an allotted amount of time. A seasoned legal counsel’s advice can help you decide the best action concerning your vehicle.
If you have a steady income and earn too much to qualify for a Chapter 7 bankruptcy, consider filing under Chapter 13, which involves a reorganization of debt to make it more manageable. Sometimes you might qualify for Chapter 7 but choose Chapter 13 so that you can adjust secured debt payments to match your income.
Rewriting a vehicle debt, called a “cram down,” is an option when purchasing a vehicle more than 910 days (about two-and-a-half years) before filing a Chapter 13 bankruptcy. If you owe more than the vehicle is worth, the rewritten debt will specify the fair market value as the amount owed. For example, if you owe $15,000 on a car with a depreciated value of $10,000, you and your creditor would rewrite the debt. You would then repay $10,000 under the court’s bankruptcy plan, with the remaining $5,000 discharged in the Chapter 13 procedure.
In Utah, if you lose a vehicle to repossession, you can get it back by filing bankruptcy as long as the creditor has not already sold it. Fortunately, an emergency petition can be filed very quickly, but you’ll have to act fast!
In the Salt Lake City area, a bankruptcy lawyer understands the benefits of Chapter 7 and Chapter 13 and how they work to prevent your vehicle from being repossessed. They’ll also help you get a repossessed vehicle back.
Filing for either Chapter 7 or Chapter 13 bankruptcy is stressful but could be the most effective way to get your life back on track. During this stressful time, the last thing you want is to have your assets taken away, but there are several ways you can retain possession of your belonging after filing. Consult our lawyers for advice on how to prevent repossession during bankruptcy in Salt Lake City. Call today to set up an initial consultation.