If you have considered filing for bankruptcy in Tennessee, you may wonder what may happen to your car after you do so. Depending on the type of bankruptcy you choose, you may not have to surrender your vehicle so you will maintain a steady means of transportation.
The type of bankruptcy matters
The two most common types of bankruptcy that individuals can file for are Chapter 7 and Chapter 13. Chapter 7 is a liquidation bankruptcy, so you may need to worry about your car if you file for this type. Typically, you must do the following:
- List your major assets, including your car
- Sell assets to repay your debts
- File an exemption if you want to keep your car
Chapter 13 is a reorganization bankruptcy, so most likely, you will be able to keep your car. You will need to follow a repayment plan for three to five years and will only repay a part of your debt.
If you are behind on auto loan payments, you are more likely to lose your vehicle. Owning it outright is the best way to protect it during either type. In this case, you can apply for an exemption.
Getting a fresh start through bankruptcy
Filing for bankruptcy doesn’t mean you have to lose everything to start over. As long as your vehicle’s value falls under your state’s exemption, you will be able to keep it. Even if it doesn’t, you may find a creative way to keep it if using it is essential to your job.
Weigh options carefully before deciding to file for either bankruptcy type. Also, make sure to keep your car loan current, even if you are struggling with other debts, as this is another way to keep it during bankruptcy.