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Nassar Law blog

Can I keep my car if I file for bankruptcy and if the car is worth less than what I owe?
21 April 2016

Generally, yes. Most creditors would prefer that you maintain possession of a vehicle financed through the creditor versus the debtor electing to surrender the vehicle. Most creditors lose on a surrender and thus prefer the debtor keeps and makes current payments on the vehicle.

However, sometimes a vehicle is worth less than what is owed to the creditor. In such situation, it may behoove the debtor to “redeem” the vehicle. This process is also known as “redemption.”

In order to redeem your car loan, the creditor must be paid the current agreed upon value of the vehicle in one lump sum. This will require the debtor to propose a value to the lender (usually the blue book fair market value), obtain an agreement by the creditor, and pay the amount agreed upon within a specified time.

Filing for bankruptcy is a complex process. Further, determining whether to exempt certain assets or if such assets can be exempted is difficult and requires planning before filing of a bankruptcy to avoid losing such assets. Thus, it is crucial that you select a highly skilled bankruptcy attorney. I make it my goal to provide each client the dedicated time and experience to assist the client with his/her bankruptcy.

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