Q: Will filing a Chapter 7 Bankruptcy stop a repossession of my car?
A. Yes, if a stay order has been issued and is in effect in your case (see above). The lender must stop any efforts to collect the debt, and this includes repossession of the vehicle. The lender must file a Motion for Relief from Stay in order to get permission to proceed with the repossession.
Q: Can I keep my car?
A. In many situations, you may be able to keep your car. As discussed about keeping a house, there a number of factors to consider. (Note: See "Can I keep my house?" above.) If you want to keep your car, then these options exist:
i. Reaffirm the indebtedness: Car lenders will frequently agree for you to keep the vehicle if you will sign a Reaffirmation Agreement. This is a new promise to the indebtedness, and, if approved by the Court, again makes you personally liable for the payment of the balance due on the loan even after you receive a discharge of your debts in bankruptcy. BE VERY CAREFUL IN REAFFIRMING ANY DEBT. Be sure your income will be sufficient to make the payments...if you default in the payments, the lender will repossess the vehicle, sell it, and require you to pay any deficiency balance.
ii. Redeem the vehicle. In a Chapter 7 Bankruptcy you are allowed to pay the secured lender the current market value of a vehicle or other tangible personal property held for personal or family use, and then keep it even if you are "upside-down" (i.e. owe more to the lender than the vehicle is worth). You must pay the full amount of the current value to the lender at the time you redeem the vehicle. (Note: There are banks and other lenders that will lend you the money to pay the redemption value to the current lender and let you keep the property. The new loan interest rate will be high, however, if you are seriously upside-down but it is otherwise a good vehicle, it may make sense to make this new loan, and it may lower your monthly payments. Discuss this with your attorney.)
iii. Retain and pay. Technically this is not authorized by the Bankruptcy Code. However, most lenders do not want the vehicle back since they will usually lose money if they repossess it and sell it. While not required to do this, many lenders will simply accept the payments, and do nothing as long as the payments are made each month. If you want to keep the vehicle but are unsure if you can make the future payments, this may be worth the risk.
Q: Will filing a Chapter 7 Bankruptcy stop a garnishment of my wages or of my bank account?
A. Yes, if a stay order has been issued and is in effect in your case (see above). The lender must stop any efforts to collect the debt, and this includes garnishment of wages or bank accounts.
Q: Will filing a Chapter 7 Bankruptcy stop judicial proceeding to collect a debt?
A. Yes, if a stay order has been issued and is in effect in your case (see above). The lender must stop any efforts to collect the debt, and this includes the continuation of a lawsuit to obtain a judgment against you.
Q: Will filing a Chapter 7 Bankruptcy stop a divorce case or domestic relations proceedings?
A. In general, no or, at least, not entirely. The relationship between bankruptcy law and divorce/domestic relations law can be very complicated, and is beyond the scope of these responses to Frequently Asked Questions. You need to consult with your attorney on a case-by-case basis in these situations.
NOTICE: The services or benefits offered are bankruptcy relief under the provisions of the U.S. Bankruptcy Code. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
