Whether you can keep your car when filing for bankruptcy depends on various factors, including the type of bankruptcy you file, the equity in your car, and state exemption laws. Here are some key points to consider:
Chapter 7 Bankruptcy:
In Chapter 7 bankruptcy, your non-exempt assets may be sold to pay off creditors. However, many states have exemptions that allow you to keep certain property, including a car, up to a certain value. Currently in California, that value is $7,500.00.
If the equity in your car is within the exempted amount, you may be able to keep it. If the equity exceeds the exemption, the bankruptcy trustee may sell the car, and you would receive the exempt amount.
Chapter 13 Bankruptcy:
Chapter 13 bankruptcy involves a repayment plan where you can keep your property while making payments to creditors over a specified period (usually three to five years).
If you have equity in your car that exceeds the exemption, you may still be able to keep it by including the non-exempt equity in your Chapter 13 repayment plan.
Exemption Laws:
State exemption laws vary, and they determine the amount of equity in your car that is protected in bankruptcy. Some states allow you to use federal exemptions instead of state exemptions depending on the circumstances and how long you have lived in your state.
Consult with a Stockton bankruptcy attorney to learn more about filing bankruptcy and keeping your car at (530)797-4402.