Unfortunately, anyone can experience financial difficulties. When an Ohio resident faces financial challenges that seem overwhelming, he or she might consider bankruptcy. However, if that person needs a car to earn a living, there may be a fear of losing it in bankruptcy. While Chapter 7 bankruptcy liquidates most assets, there are steps that a consumer can take to maintain ownership of a car.
The options will depend on whether the filer still owes money on the vehicle. The state has a vehicle exemption amount, and if a paid-off car’s value is below that amount, the bankruptcy court may allow the consumer to keep the vehicle. However, if the value exceeds the exemption amount, the court may order the surrender of the car. If there is an outstanding balance of the car loan, the owner’s choices are to continue payments or to give it back to the loan provider and have no further liability.
One way to keep a vehicle in bankruptcy is through a redemption agreement with the lender. This involves a bank accepting an offer of the current value of the car, regardless of the owed amount. However, it will require the bankruptcy filer to pay the redemption amount in a lump sum. The other option is to continue making payments by reaffirming the debt in a court-approved reaffirmation agreement. Either way, the consumer will have to prove the need for keeping the car in the bankruptcy court.
This merely indicates that there are manners in which a car can be kept in a Chapter 7 bankruptcy filing. It is a complicated legal process, and an experienced Ohio bankruptcy attorney might be the best person to explain the requirements and procedures to follow. A skilled lawyer can provide the necessary support and guidance that might result in the consumer keeping the vehicle that he or she needs to earn an income and regain financial stability.
Source: autocreditexpress.com, “What Happens to Your Car in Chapter 7 Bankruptcy?“, Accessed on Feb. 10, 2017