Vance P. Truman, Attorney at Law
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Don't assume that you can keep your car post-bankruptcy

There are many positives associated with filing for Chapter 7 bankruptcy. One main benefit is that most debtors have an opportunity to keep most of their assets by filing for it. It's also a relatively quick process lasting only a matter of months. It's sadly not always possible to keep your vehicle during this process, though.

Provided that you pass the means test and are eligible to file for Chapter 7 bankruptcy, you'll be asked to fill out a document listing your debts, assets, exempt property and also your expenses. The trustee presiding over your case will ultimately use this information that you provide to decide what assets you can keep or have to liquidate.

Most state laws allow debtors to retain their necessities including tools of the trade, clothing, furniture and household appliances as well as a portion of the value of their car and home. These items are classified as exempt property. The trustee may order you to sell off your vehicle or house if either exceeds a certain market value.

It may be of some solace to you to know that if you're behind on making the mortgage or car payments, then you'll be able to stop creditors' foreclosure, repossession and other collection efforts simply by filing Chapter 7 bankruptcy. This may give you the necessary time that you need to find another place to reside or a car that you can acquire in case these are ultimately taken from you.

There are two different approaches that you may ultimately decide to pursue if you want to keep your car. You may pay your lender a lump sum that covers the market value of the vehicle through a process called "redeeming". You may also decide to reaffirm your loan with your lender. You essentially reaffirm that you will start making consistent payments on your loan moving forward as part of this process.

You should know that not everyone qualifies to file for Chapter 7 bankruptcy. If you don't, then your trustee may convert your case to a Chapter 13 one instead.

A Chapter 7 attorney can review your financial situation and determine whether you may be allowed to file for this type of bankruptcy. If you can't, then your Medina lawyer can advise you of other ways that they've helped thousands of people get a fresh start elsewhere in Ohio that may also work for you.

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