Keeping Your Car
There are several ways for you to keep your car even if you file under chapter 7. First there’s a standard federal exemption (if you live in a state that allows federal exemptions) of $1,200 per car. You may also be able to apply an additional “wild card” amount to the remaining equity balance. Then if the car is still worth a bit more, you can often arrange to pay off the balance in a lump sum or in installments.
If you can, make your car payments on time. After the filing your attorney may have you sign an agreement with your car’s finance company reaffirming the debt which may allow you to keep your wheels despite filing for bankruptcy relief. But if you’ve been behind on your payments, the people who hold your car note may not be very receptive to any new offer.
There are several sets of laws that govern how much of your assets you can keep. Your attorney should provide you with the lists outlining your options. Study them carefully. Some states have eliminated the option of choosing the federal exemptions. Others haven’t. A discussion of these exemptions is beyond the scope of this report. Most of the do-it-yourself paperback bankruptcy guides will provide you with more information.
If you’re married should your spouse file? Ask your lawyer, but the answer will probably be yes. If you don’t protect her in this way she may inherit many of the same debts you shed.
Ask your lawyer about what you should do with your house payments. If you own a home that your attorney feels confident you will lose, there’s little point in throwing good money after bad. Your lawyer may advise you to stop making payments altogether or to make fewer or lesser payments.
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