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“Can I Keep My Car?”

March 28, 2013 Leave a comment

This question has to be one of the most frequent questions I hear as a bankruptcy attorney.  Most people believe that if they file a bankruptcy they are going to lose everything, including their vehicle.  That, in most cases, is just simply not true.  In Missouri, you can protect up to $3,000 in vehicle equity during a bankruptcy.  If you are married and filing jointly $6,000 of equity in your vehicle will be protected by the Missouri Motor Vehicle exemption.  Vehicle equity is the fair market value minus the amount of money owed on the vehicle.  For example, if your car is worth $10,000 and your loan on that vehicle is $9,000, your equity is $1,000.  You can look up the fair market value of your vehicle on KBB.com or NADA.com.

If you do not have more than $3,000 of equity in your vehicle, keeping your car will not be a problem.  You can file a Chapter 7 bankruptcy, reaffirm the debt on the vehicle and keep making the payments.  When you do have more than $3,000 of equity in your vehicle and want to keep it, Chapter 13 is possibly a better option for you.  A Chapter 13 bankruptcy will allow you to keep your vehicle, paying back the un-exempt portion of the equity to the Trustee over a period of 3-5 years.  This money paid to the Trustee will be distributed to your unsecured creditors and you will be able to keep your vehicle.  A Chapter 13 bankruptcy is also helpful when you are behind on your car payments and the finance company is threatening to repossess the vehicle or already has done so.

It is also alright to own multiple vehicles.  There is no limit to the number of vehicles you can keep during your bankruptcy.  You can split up the exemption and apply it to as many vehicles as you would like.  The types of vehicles that qualify under the Motor Vehicle Exemption in Missouri are defined as a self-propelled vehicle designed primarily for use on highways.  That definition covers most cars, trucks and motorcycles.

If you do have more equity in your vehicle than what is allowed by the exemption and you still want to file a Chapter 7 then the Trustee is likely to sell your car and distribute the money to your unsecured creditors.  That is a decision you and your bankruptcy attorney can make before the filing of your case and something that should be discussed before the 341 meeting with the Trustee.

If you have questions about this, or anything else related to bankruptcy, it is my recommendation that you consult with a St. Louis Bankruptcy Attorney today.  We offer free consultations at a number of locations.

Can I Keep My Vehicle If I File Bankruptcy?

February 1, 2013 Leave a comment

A common concern for debtors that are considering filing for bankruptcy is whether or not they are going to lose their vehicle if they file a bankruptcy.  The answer to this question depends on several factors so it would be in your best interest, if this is a concern of yours, to consult a bankruptcy attorney in your area.

If you are filing a Chapter 7 bankruptcy, which will discharge all of your unsecured debts, you still may be able to keep your vehicle, but it mostly depends on whether or not you have equity in that vehicle.  For example, if you own a vehicle without a loan on it and your vehicle is worth $5000, the trustee will take an interest in that vehicle.  The trustee’s job is to find assets, liquidate them and then disperse the money to unsecured creditors to pay off your bills.  In Missouri, we have exemptions that can protect your personal property.  If you are a single filer, you can protect up to $3000 of equity in your vehicles.  If you are a joint filer with your spouse, the exemptions allow you to protect a total of $6000 in your vehicles.  To sum it up, if you have a loan on your vehicle and your vehicle is worth less than what you owe on it or if your vehicle is worth more than what you owe, but less than $3000 more, then you will not have any issues keeping your vehicle.  If your vehicle does have equity, then you have a couple of options.  Those options include surrendering your vehicle to the trustee, making a cash offer to the trustee that will enable you to keep the vehicle or filing a Chapter 13 bankruptcy and paying off the equity through the course of the Chapter 13 plan.

A Chapter 13 bankruptcy is a good option if you have equity in your vehicle.  You could pay back the equity over the course of the plan and that money would go to some of your unsecured creditors to help pay them back what you owe them.  Additionally, a Chapter 13 can also save a car if you are behind on your payments or, in certain circumstances, if your car has been repossessed.  If you were to file a Chapter 13 bankruptcy, your loan balance for your vehicle will be put inside the plan and paid off over 60 months at the court’s interest rate, which is often a lower interest rate than you received in your original contract with your lender.  Additionally, if you are having a hard time making your car payments because they are too high, a Chapter 13 can stretch those payments out over 5 years and make it more affordable.

To summarize, the bankruptcy laws are written to give the debtor an opportunity to protect their personal property, but the laws can be complex and it is always a good idea to speak to an attorney so you know exactly what your rights are in regards to your vehicle and any other property you might own.  If you have questions about this article or anything else related to bankruptcy, it is my recommendation that you consult a St. Louis Bankruptcy Attorney today.  We offer free consultations at a number of locations in the area.

 

When to File Chapter 13, by Bankruptcy Attorney in St. Charles, MO Tobias Licker

If facing foreclosure or repossession, a Chapter 13 bankruptcy filing may be the right option for you

Filing for bankruptcy is an option for some people who are simply buried in debt. An individual, couple or company may file for bankruptcy due to a change in income or a loss of revenue. Certain circumstances may force an entity into bankruptcy, like medical bills or a change in lifestyle, such as a divorce. For individuals and couples, the common options for bankruptcy are filing a Chapter 7 or Chapter 13.

What is Chapter 13?

If facing foreclosure due to some missed mortgage payments, or to keep a car from being repossessed a Chapter 13 filing will allow the individual or couple to create a payment plan to catch up with missed payments. The payment plan may span over a three to five-year period, depending on the household income and the monthly amount of the payment plan.

While the bankruptcy is in process, an automatic stay is put in place to keep creditors from repossessing or foreclosing on property. A few weeks after the initial filing, the Court will schedule a meeting of creditors where the bankruptcy trustee will meet with the debtor to verify the information on the bankruptcy petition. After the creditors’ meeting the court schedules a confirmation hearing to which the debtor does not need to appear. Only those creditors that object to the filing will appear and state their objections to the Trustee. In most cases, there are no objections and the chapter 13 plan can be confirmed.

The Chapter 13 Payment Plan

The Chapter 13 plan sets forth a payment plan for the secured, unsecured, and priority debt of the filer(s). Payments are received by the Trustee and distributed to creditors. A few weeks after the plan is filed with the court, a hearing is held to confirm the plan. If the Trustee does not object and finds that documents provided are “confirmable,” the judge will confirm the plan.

The debtor will make monthly payments to the trustee in form of a money order or cashier’s check. Should the unforeseen happen, and the debtor is unable to keep up with the plan’s payments, other options are in place to reduce payments or to convert the case to a Chapter 7 bankruptcy. A Chapter 7 bankruptcy generally liquidates the debtor’s non-exempt property to pay creditors.

The bankruptcy process is very complicated, and many forms must be filed in a timely manner in order to comply with the mandates of the court, as well as the requests of the Trustee. Retaining the services of an attorney who specializes in bankruptcy in your area is highly recommended to make sure all necessary documents are filed in accordance with the court’s schedule. If you are considering filing for bankruptcy, consult an attorney to find out more about whether you should file a Chapter 7 or Chapter 13.

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