Reaching the point at which your debts are too high that you feel the need to seek some relief from them is a challenging decision to make. Filing for bankruptcy is a serious decision that can have far-reaching consequences to your life, even years down the line.
As you are likely aware, there are two types of bankruptcy that consumers can choose to file. There’s Chapter 7 bankruptcy, which involves the liquidation of some of your assets. Then there’s Chapter 13 bankruptcy, which allows you to hold on to most of what you have provided you create a repayment plan and make timely payments to your debtors.
Many people are worried that they might lose everything when they file for bankruptcy. However, it is not the case, as detailed below. You may actually get to keep some assets even after filing for bankruptcy.
Several factors affect what you can keep
Whether you get to keep your car or not depends on the type of bankruptcy you file for, the amount of equity you have in your vehicle, as well as the state laws at play. For instance, while many states have bankruptcy exemptions that protect property in bankruptcy, Tennessee does not have a motor vehicle exemption. However, you can make use of the wildcard exemption to secure property whose value does not exceed $10,000, except for real estate.
If you own a car that you would lose after filing for Chapter 7 bankruptcy, like a car worth more than what is allowed by your state, you may opt to file for Chapter 13 bankruptcy instead. Doing so may allow you to keep it.
Make informed decisions
Learning more about bankruptcy laws is in your best interests. For example, if the car is under a loan, you may reaffirm the car loan and agree on new terms with the lender to ensure you remain in possession of the vehicle. Making informed decisions while navigating the bankruptcy process is very important. It might help you retain some assets that you hold dear.