Bankruptcy and Vehicles

We are bankruptcy attorneys located in Eastgate, Ohio.

One major concern for most of our clients thinking of filing bankruptcy is what will happen with their vehicle. There are several factors that affect this outcome, so there is no simple, easy answer. The answer to this is based on your individual situation.

There are several stages that you could be in with your vehicle. You could be current on your payments, you could be upside down on your vehicle, you may be behind on your payments or your vehicle may have already been repossesed by the creditor.

You are current on your vehicle

When you are current on your vehicle and it is your intention to keep your vehicle through Chapter 7 bankruptcy what you will need to do is to continue to make your payments. Just continue making your payments through the bankruptcy filing, there will be a reaffirmation agreement for you to sign. A reaffirmation agreement is a bankruptcy document in which you will re-sign on your vehicle loan. This reaffirmation agreement makes the debt that you owe on your vehicle non-discharged through your bankruptcy and guarantees that the creditor will report your payments to the credit reporting agencies. Once you sign the reaffirmation agreement is it as if you never did file for bankruptcy when it comes to your vehicle.

You are upside down on your vehicle

The simple explanation is that you owe more for your vehicle than it is worth. You could be in this situation for one of several reasons, it is usually because a person had traded in a previous vehicle that they still owed on and just tacked in on to their current loan. This can also happen just because of how quickly vehicles do depreciate. There is a program that is out there that will help you to re-finance your vehicle for the amount that the vehicle is worth, but this can only be done through bankruptcy. Through the banklruptcy court this option is called redemption.

You are behind on your vehicle payments

If you are behind on your payments you cannot do a Chapter 7 bankruptcy and keep your vehicle. You can do Chapter 7 if you plan to immediately make your account with the vehicle creditor current. If you are not current on your vehicle, the creditor will want you to get current before they will allow a reaffirmation agreement to be entered into. If you are behind on your vehicle, and want to keep it and do not have the funds to get current on your payments, then Chapter 13 would be able to help you. Under Chapter 13 bankruptcy you can catch up the payments you are behind on your vehicle over the next 3-5 years.


Once your vehicle has been repossesed and you wish to get it back the only way to do that is through a Chapter 13 Bankruptcy. If your vehicle has been repossesed and not yet sold at auction, that’s right a Chapter 13 Bankruptcy filing will be able to get your vehicle back.

If the vehicle is repossesed and you do not want to retain the vehicle, once the creditor sells the vehicle at auction you would than carry a “deficiency balance“. What this is is the balance that is due after they applied the amount received at an auto auction. This unsecured debt could then be discharged through a bankruptcy.

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Everyones situation is unique. To find out the best way to handle the situation you are currently in, contact our office for your free consultation. At this consultation the bankruptcy attorney will be able to discuss all your options with you.

Contact our Eastgate, Ohio Bankruptcy Attorney today.