As a Sacramento Bankruptcy Attorney I advise my cleints frequently on what to keep and what to surrender in a chapter 7 or a chapter 13 bankruptcy.
Yesterday we discussed the issue of what happens to your vehicle when you file for bankruptcy. In most cases, you can choose whether you want to keep or surrender it. Let's explore these options more in detail.
If you choose to give up your car or truck you simply state your intention to surrender it on the Statement of Intention form that you file with your bankruptcy papers. That's all there is to it. You won't be responsible for any debt associated with your vehicle after your bankruptcy.
If you want to keep your vehicle there are different ways of accomplishing this. First, you can buy it by giving your lender a lump sum payment based on its current value. This is what's known as Redemption. Second, you can enter what's known as a Reaffirmation Agreement. This is essentially a new contract that allows you to keep your vehicle and continue making payments in line with the original vehicle loan.
Also, a lender will sometimes allow you to retain your vehicle without signing a reaffirmation agreement. You can simply continue to make your payments according to your original loan. This is what's known as a Ride-Through agreement.
