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Which Chapter of Bankruptcy to Chose When You Have A Car or Truck

Red Pickup TruckFiling for bankruptcy in Texas almost always involves a car or truck. When deciding to file bankruptcy keeping a car or truck is usually the first thing a client wants to know about.

There a number of options when you are trying to protect your vehicle and get out of debt.

With Chapter 7 if the value of your equity in your car or truck is below exemption limits you should be able to keep your car or truck and wipe out your unsecured creditors.

If you have a loan against your car or truck and file Chapter 7, you must continue to make the payments.

In addition to making your payments, your lender may require you to sign a reaffirmation agreement to keep your car or truck. This re-establishes your personal liability on the loan.  You want to speak with your bankruptcy lawyer before making this decision.

If you have too much equity to protect in a Chapter 7, you may want to consider Chapter 13.  You could pay back a portion of your debts over a 3-5 year period and keep your car or truck. If you are considering filing for bankruptcy, DO NOT SELL OR TRANSFER your car or truck without talking to your bankruptcy lawyer first.

You must report to the bankruptcy trustee any property transferred before filing. Depending on when the transfer was made and to whom it was made may raise questions and jeopardize your discharge.  You should talk to a lawyer before selling or giving away any of your assets. You do not want to file bankruptcy and then not get a discharge.

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Posted October 2014