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What About Your Car?

In order to retain your vehicle, you must consider the interests of your lien creditor, who usually loaned you the money to purchase the vehicle and the trustee who represents the interests of your creditors. However, you must consider whether it is in your best interests to keep the vehicle.

As an exemption, each of you are permitted, under Florida law one thousand dollars in equity in a single vehicle. The Trustee will typically not have an interest in your vehicle if it is worth one thousand dollars or less or your vehicle is not worth one thousand dollars or more than the amount you owe on the vehicle at the time of filing.

You should be current on you vehicle payments at the time of filing your case if you want to keep your car in a Chapter 7 case. You should also be prepared to remain current on your future payments to your lien creditor and, if necessary, make arrangements to pay the Trustee for any equity in excess of one thousand dollars. In a Chapter 7, your Trustee represents your creditors and in cases where you have more equity than is exempt (what you are entitled to keep) your Trustee will collect the excess and pay it to your creditors, based upon the amount they are owed.

If you have more than one thousand dollars in equity in a vehicle, and want to keep the vehicle, then we will usually try to negotiate an agreement with your trustee to allow you to make payments to the trustee for his or her interest in vehicle. If you do not want to keep the vehicle, the trustee can sell the vehicle and pay you your one thousand dollar vehicle exemption in cash.

Of course, you must also make your car payments to the creditor that has a lien on you car and you may be required to make arrangements to sign a reaffirmation agreement with regard to the car which restores some of the rights your car lender lost when you filed for bankruptcy. If it does not make sense to keep your car, you may surrender the car to the Creditor and not owe a deficiency. If you owe a small amount compared to what the car is worth or have a high interest rate, you may wish to redeem the vehicle, which you can discuss the specifics of with the attorney to determine if this is a sensible option.

In a Chapter 13 case, you have additional options with regard to your vehicle and the Creditor with a lien. You can catch up on missed payments through a Chapter 13 plan similar to missed house payments. If the loan on the car is more than two and one half years old, you could also request that the judge determine that your car is worth less than you owe or that your current interest rate is too high and adjust the amounts you must pay accordingly. This is called a motion to value. Although we cannot force a Creditor to allow you to pay based upon the value of the vehicle if the lien is less than two and one half years old, but we can make such an offer and a creditor may make a business decision to allow you to pay based upon the value since you would likely be willing to pay more for your car than a stranger.

If you do not have a lien on a vehicle worth more than a thousand dollars or have a lien and significant equity, you can pay the Creditors= share as part of your Chapter 13 plan, in monthly payments, usually over a longer period of time than in a Chapter 7 case.

Please call 813-251-6666 to schedule a free initial consultation.

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