What Happens To My Car If I File For Bankruptcy?
For most of us, our vehicles are like lifelines. Cars are the tool by which we go to work and thus support ourselves. It should come as no surprise then that “Can I keep my car?” is the question I hear the most from my clients. The answer to the question is not simple.
In a Chapter 7 bankruptcy, the debtor’s nonexempt assets are liquidated and proceeds are used to pay off creditors. Many people are afraid to file for Chapter 7 bankruptcy because they fear losing all of their property, especially their cars.
In reality, most people who qualify for Chapter 7 bankruptcy have little or no qualifying assets to lose. Most properties, including family homes and vehicles, fall under the list of bankruptcy exemptions.
Illinois Bankruptcy Exemptions
Filing for bankruptcy makes it illegal for auto loan creditors to repossess your vehicle. In some cases, filing for bankruptcy can help you get back a vehicle that has already been repossessed.
Important bankruptcy exemptions under Illinois law include:
- $15,000 of equity in a home ($30,000 for a married couple filing jointly)
- $2,400 of equity in a motor vehicle
- 100 percent of pensions and retirement benefits
- Personal property such as clothing, furniture and books
- Cemetery and burial funds
- A wild card exemption of $4,000 that you can apply to any property, aside from wages
If you have concerns about losing your car in a bankruptcy, it is important to work with an experienced lawyer. Mistakes in regard to bankruptcy exemptions can result in losing property you should have been able to keep.
With more than 30 years of experience, I can help you enjoy the protections of bankruptcy law while keeping as much property as the law will allow.
How To Contact Me
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.