Will you be able to keep your car after you file bankruptcy in Georgia? The answer to this question depends on what type of bankruptcy case you file and the specific facts of your case.
Lets start with Chapter 13 bankruptcy. If you owe money on car and we file a Chapter 13, the balance that you owe on the car will be paid in your Chapter 13 plan. Thus, in most cases, people keep their cars.
People who lose cars after they file Chapter 13 bankruptcy usually do so for one of three reasons. First, the balance they owe on the car is so that high that its not worth keeping it and paying for it through a Chapter 13 plan. In many Chapter 13 plans, we can give the car back to the creditor and wipe out any balance owed. For some clients, this option is extremely attractive.
The second reason some people lose their car in a Chapter 13 is that they let the insurance lapse on the vehicle which forces the creditor to take back the car in order to protect it.
A third reason is that the debtor quits making the Chapter 13 plan payments. In this situation, a car creditor will file a Motion for Relief to take back the car.
In cases where the car is paid for, the question that we need to answer is “How much is your car worth?” The Georgia exemption for cars is $3,500.00. Also, depending on the circumstances of your case, we may be able to use the wildcard exemption to protect an additional $5,000.00 on your vehicle. If you car is paid for and worth more than $8,500, you most likely to consider Chapter 13 to protect it. If you know that your car is worth more than $8,500, make sure you point this out to your Georgia bankruptcy attorney at your first meeting.
In Chapter 7 bankruptcy cases where you owe money on the car, you will usually be able to keep the car as long as you are current on your payments and the creditor allows you to reaffirm the debt. A reaffirmation agreement is basically a contract between you and your creditor that says you will legally agree to treat the debt as if you have never filed. Car creditors don’t have to let you reaffirm if they don’t want to deal with the hassle of a reaffirmation agreement. However, almost all cases, the car creditor is willing to enter into a reaffirmation agreement because it puts them in a solid position. You can’t file Chapter 7 against them again for 8 years! For this reason, I tell all of my Chapter 7 clients to think long and hard before they sign any reaffirmation agreement.