Legal Question in Bankruptcy in California
Secured Property and Exemptions
Can a secured (automobile) loan be discharged when claimed as a Wildcard exemption in a Chapter 7 petition?
Also, what is the court's view of Reaffirmation Agreements and what happens if an agreement is not entered into with the creditor?
1 Answer from Attorneys
Re: Secured Property and Exemptions
Your question mixes apples and oranges. If you have equity in your car upon which a loan exists, you can exempt up to a certain amount of equity, which means it won't be liquidated to pay your creditors. You may give the car back to the creditor without monetary penalty while in bankruptcy, you can continue to pay the loan, or you can reaffirm. Many lenders will work with the debtor and allow continued payments without reaffirmation agreements. It just depends on the lender and the amount of equity in the vehicle.
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