Legal Question in Bankruptcy in Texas

Re: Car Loan

Bankruptcy does not "pay off" any loans, it discharges the debtor from paying the debt. In the case of a car loan you would be discharged from paying the debt, but the lender would take back the car. In order to keep the car you would have to reaffirm the debt, so you would still be obligated to pay it. Larry Maun 713,266,2560

Re: Car Loan

No. Under Chapter 7, you can discharge or liquidate the underlying debt obligation, but you cannot then keep the car. If the car is surrendered or repossessed, this is how you would dispose of the original obligation on the car and avoid any lingering deficiency actions(where the car creditor goes after you for the difference between the original car note amount, and what the car value was on resale after repo/surrender)

If you want to keep the car, keep your payments current and file a Chapter 7, or put your payments in a repayment plan under Chapter 13.

If you are filing bankruptcy in the Dallas/Fort Worth area, feel free to contact me.

Cole Fulks 817.377.2521 [email protected]

Re: Car Loan

Short answer -- If you file a bankruptcy under Ch. 7 it is likely you can "keep" your vehicle and the loan can be repaid.

Under Texas law you can exempt from creditors the equity in an automobile. This "exemption" (bankruptcy term for property you are entitled to keep in spite of creditors after you file) can be used for one car for each member of a family in the case of a joint filing. In other words, the Bankruptcy Trustee cannot force the sale of your car to pay creditors.

However, Ch. 7 cannot make the car loan disappear. The car financing company (like GMAC) holds a collateral interest in your car and if the loan is not addressed in the bankruptcy then the finance company can repo your car. Basically, when you are in Ch. 7 you have some options to handle the repayment. Most likely your attorney will work with the finance company and enter into an agreement for you to repay your car loan with the same payments terms that you currently have. This is called a "reaffirmation agreement". A good lawyer can sometimes negotiate a better interest rate and there are some other strategies that can be used. I'm not exactly sure I understand your question regarding the bankruptcy "paying off your car loan". But if you mean can you get out of your loan and walk away the answer is yes. Most people do not wish to receive a "discharge" (bankruptcy term meaning wipe-out or eliminate) for their car loan. This is because if the loan is eliminated completely (discharged) then the car would have to be returned to the finance company. Basically this amounts to a voluntary repo. This can be a good thing for a bankruptcy filer especially if the car is worthless or where a car has many service problems and repairs that are frequent. I hope this answers your specific questions. Please feel free to contact me personally to discuss your particular situation in greater detail. ph (800) 303-0720