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I fell behind in car payments and recently found out that the loan has been charged off. I have tried to work out a payment arrangement with finance company but they want either the entire balance(5K) or the car. Ridiculous since the car isn't worth that much. I don't understand why they don't want money. Anyways, because of this I am thinking of filing Chapter 7 and getting a fresh start. When does the car have to be surrendered during a bankruptcy process? There is a repo order out but they cannot find car.Thank in advance
keeping car during bankruptcy
Hi Nicole,
As far as I get from your post, now you aren't making any payments on the car. If you are filing chapter 7, and is not making any payments on the car, and if it's value falls under the state vehicle exemption amount, you may keep the car. However, if you are making payments on the car you will have to surrender the car.
Unlike chapter 7, in chapter 13 bankruptcy, you are allowed to keep all or some of your property. However, you need to pay off all, or atleast some amount of debt through a repayment plan approved by the court.
However, if you really want to hand away the car, you will have to mention it to the lender that you intend to give away the car. This clears you of any liability on the debt after bankruptcy discharge. However, before handing over the car, get an agreement in writing that the lender won't ask for any other money.
Thanks,
Aaron