Due to the recent financial crisis, many honest debtors who have never had trouble paying their bills have found themselves considering Chapter 7 bankruptcy for much needed debt relief and a fresh financial start. But for many, the possibility of losing essential assets, such as their car, threatens to make a bad situation even worse. Fortunately, for those who seek relief under Chapter 7 bankruptcy, there are a few ways to keep your car after filing Chapter 7 bankruptcy in Oklahoma.
Firstly, if you are behind in your car payments and your creditor is threatening to repossess, when you file for Chapter 7 bankruptcy, an automatic stay of all creditor actions against you will go into effect. This stay will suspend all collection activities against you for the duration of the bankruptcy proceedings and allow you time to pursue options for keeping your car.
Oklahoma Motor Vehicle Exemption
Secondly, you may use the Oklahoma motor vehicle exemption to protect your car during Chapter 7 bankruptcy. In Oklahoma, you are allowed a $7500 exemption per person ($15,000 per married couple) for a single vehicle. So, if you happen to owe nothing on your car and it is worth $7500 or less, you can file Chapter 7 bankruptcy and keep your car.
If your vehicle is worth more than the exemption allows, you can still keep the car, but you will owe the court the difference between the exempted amount and the value of the car. If you cannot pay the difference, the court can sell the car for what it is worth and pay you back the amount of your exemption, with which you may purchase another vehicle that you can afford.
Redeem Your Car From the Loan Company
A third option is to “redeem” your car from the loan company, which means paying off the auto loan in one lump sum payment for the amount that it is actually worth, instead of what you owe on it. Redeeming your car can be a huge savings to you if you have the money to pay off the loan.
If you don’t have the money to pay off the loan, you may be able to obtain help from one of a number of companies that provide financing specifically for “vehicle redemptions.” In this way, you may be able to find terms that will allow you to keep your car after filing Chapter 7 bankruptcy and significantly lower your monthly loan payments.
Reaffirm Your Loan with the Loan Company
If you are not behind in your car payments and there is evidence that you will have no problem making your payments after Chapter 7 bankruptcy, you may be able to “reaffirm” your auto loan by signing a “reaffirmation agreement” with your loan company. This action will allow you to continue making your regular payments and keep your car after filing Chapter 7 bankruptcy.
However, after receiving a discharge under Chapter 7 bankruptcy, you will be ineligible to file again for several years. Therefore, if you fall behind in your payments in the near future, you will be unable to seek refuge under Chapter 7 bankruptcy and your loan company will be able to employ whatever legal means available to them to collect the debt.
Surrender Your Car and Get Something Less Expensive
Finally, if you are paying more for your car than what it’s worth, or you believe that you will still have trouble making the payments after Chapter 7 bankruptcy, you can surrender your car to the loan company during the bankruptcy proceedings, without having to pay anything else. Then, while you rebuild your credit after your bankruptcy, you can find a less expensive automobile to get you back and forth to work until you are able to afford something better.
Free Consultation: Claremore Bankruptcy Attorney
For information on how Chapter 7 bankruptcy can work for you, contact a Claremore bankruptcy lawyer for a free initial consultation regarding your situation. Simply call our office at (918) 213-0950 or, you can enter your legal question or concern in the form at the top right of this page, and one of our attorneys will promptly email or call you.