Roseville Bankruptcy

Car Loans in Chapter 7 Bankruptcy

By

Car loans often represent the largest debt in chapter 7 bankruptcy liability schedules. Unless a bankruptcy petitioner has a mortgage, car loans can be the most significant debt in bankruptcy. Since the goal of chapter 7 bankruptcy is debt relief some petitioners want to know whether they can eliminate their car loans in bankruptcy.

Are You Keeping The Car

Chapter 7 bankruptcy can eliminate a petitioner’s personal liability for a car loan, but it can’t erase the creditor’s security interest in the car. Accordingly, if a bankruptcy petitioner wants to keep the car, they must make their monthly car payments. If a bankruptcy petitioner stops making the monthly car payment, the creditor can repossess the car but can’t sue the petitioner personally during the bankruptcy (due to the automatic stay) or after the bankruptcy if the debtor receives a discharge.

Repossessions

Debt resulting from past repossessions is common in chapter 7 bankruptcy cases. In cases when the car has already been repossessed and sold at auction, petitioners are left with a bill that can exceed $10,000. Fortunately, in chapter 7 bankruptcy the deficiency balance or other debt resulting from repossession is unsecured debt. (After all, the car in which the creditor had a security interest has already been repossessed and sold). In chapter 7 bankruptcy, unsecured debt such as repossession debt is generally dischargeable. That means that repossession debt can be eliminated in chapter 7 bankruptcy.

Sacramento Law Group LLP is a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code. Our services, benefits and assistance may involve and are with respect to bankruptcy relief under Title 11 of the United States Code. Adam Garcia is responsible for this communication. ADVERTISEMENT. By Adam Garcia on Google+
*$900 Chapter 7 Bankruptcy Fee Disclaimer: While most cases qualify for the above fee, some cases are complex. Consequently, the above fee is only a sample fee (not a specific or guaranteed fee) and is subject to change at any time due to the necessity of charging more for complex cases. The sample chapter 7 fee represents the typical fee for a simple no-asset chapter 7 case. The $900 fee is only available to residents of the following counties: Sacramento, Placer, Yolo, Solano and San Joaquin. Residents of other counties may be charged more.