Legal Question in Bankruptcy in Indiana

Re: Ability to keep Vehicle w/loan after chapter 7

You have three options as to debts that are collateralized such as a vehicle loan:

1. Surrender-give it bac and the debt is discharged

2. Redeem it-pay the fair market value and discharge the balance of the debt-unfortunately, this requires a lump sum payment and most people dont have that much cash

3. Reaffirm-agree to pay as if you had not filed-unfortunately, most creditors will require that you are current. Also, be aware that a creditor can refuse to let you reffirm, even if you are current and demand return of the vehicle

Some lenders will allow you to put one or two back payment sat the end of the contract, extending the term of the loan-it depends on the creditor

An experienced bankruptcy counsel can help you thru the morass of choices and financial decisions, including the need for filing as opposed to other options-most give free initial consultations-ask about ch 13-you can repay only the fair market value of your truck at a reasonable interest rate of around 6.5%

Good Luck!

John E Bator

Bator Redman and Shive, P.C.

317-685-2426

Re: Ability to keep Vehicle w/loan after chapter 7

Filing a petition for chapter 7 bankruptcy protection might buy you a few more months of wheels, but ultimately, if you are unable to catch up the payments and stay current, your vehicle will eventually be repossessed.

Sometimes all folks need is a few months to get caught up and a chapter 7 filing might buy you the time you need.

If you think you won't ever get it caught up, then the clock is ticking on the vehicle.

Re: Ability to keep Vehicle w/loan after chapter 7

In a Chapter 7 bankruptcy, one of you options with secured creditors (such as the lender who holds a lien on your truck) is to "reaffirm" the indebtedness to the creditor. By doing so, you are in essence agreeing that the creditor can act as if the bankruptcy was never filed if you get behind again.

Both parties must agree to the reafffirmation and must agree to the TERMS of the reaffirmation. Sometimes creditors will agree to put the payments you are behind at the end of the contract rather than make you pay everything up-to-date.

So you may well be able to keep your truck (and pay for it) if you file bankruptcy, but you should consult with your own bankruptcy lawyer because other factors could create problems in the proposed course of action.