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Reaffirming a car loan in a Chapter 7 Bankruptcy

When you file a Chapter 7 bankruptcy, you are not required to give up everything that you own. The bankruptcy rules allow you to exempt property such as household goods, clothing, as well as your car.

When you file for Chapter 7 bankruptcy, and you have a car loan, you must indicate in your bankruptcy paperwork whether you intend to keep the car or give it back. If you want to keep it, you’ll have to pay for it, and one of the ways you can do so is to enter into a new contract with the lender in a process known as reaffirming the car loan.

What is a Reaffirmation Agreement?
When you reaffirm a car loan in bankruptcy, you sign an agreement with the lender that you will continue to pay for the car as if you had not filed bankruptcy in exchange for keeping it. To reaffirm a car loan, you must be able to show the court that the vehicle is necessary and that the payment is reasonable. You must also be able to show that the car payment isn’t an undue hardship on your household (you’ll still be able to afford the necessities of life). After you receive your bankruptcy discharge, you are bound by the reaffirmation agreement and you can keep the car as long as you keep making the payments.

If you have questions about a reaffirmation agreement in a Chapter 7 bankruptcy or have general questions about bankruptcy, please contact our office at (206) 408-8158, or by email at: [email protected]firm.com.

Contact us:

19803 1st Avenue S.
Suite 200
Normandy Park, WA 98148

T (206) 408-8158
F (206) 374-2810

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