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Can I keep my car?

10/17/2012

 
     This is one of the most common concerns of people who are considering filing for bankruptcy.  Usually this is not a problem, but it depends on a few things.  First, if you have a loan on the car, are you able to afford the monthly payment?  If not, you may want to consider surrendering the vehicle back to the bank.  Another option is to renegotiate the terms of the remainder of the loan through a reaffirmation agreement so you can get a lower monthly payment.  Yet another option is to redeem the vehicle, which means paying the lender the current market value of the vehicle in exchange for a release of the lien.  This is particularly beneficial when you have a large balance remaining, but a low value.

     If you do not have a lien on the vehicle, how much is the vehicle worth?  A Debtor is only allowed a certain amount of equity in one vehicle.  Under federal exemptions, you would be allowed equity of $3,450.  If your vehicle is worth considerably more, under federal exemptions, we could use some of the wildcard exemption.  Giving you a definitive answer about whether you can keep the car becomes more complicated because I would not be able to give you an answer without knowing more about your other assets. Under Hawaii exemptions, if you used the vehicle for work, it is completely exempt no matter how much it is worth.  We analyze your circumstances and let you know how you will fair best.
 


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