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Can I keep my auto loan if I file bankruptcy?

| Nov 1, 2017 | Chapter 7 Bankruptcy

If you are thinking about filing for bankruptcy in Florida, you may have many questions. One of those may be what will happen with your vehicle loan. If you do not own your vehicle, how is that handled when you file? Will you lose it? Can it be left out of the bankruptcy?

According to BankRate, regardless of whether you wish to continue paying on a debt or not, it must be included when you file Chapter 7 bankruptcy. It can be listed as a debt in your filing paperwork with the indication that it is not to be discharged as part of the bankruptcy. However, for the purposes of your credit, it will be reported that the loan was part of your bankruptcy.

To fix this and use the repayment of the loan to help reestablish your credit, you will have to take some additional steps. When filing your bankruptcy paperwork, you must include a reaffirmation agreement that states you intend to continue paying on the loan and promise to repay it according to the terms. While you may end up keeping your vehicle and being allowed to make payments on the loan, if you fail to file the reaffirmation agreement, this is not a guarantee. Your lender may decide to repossess the vehicle. It is best to file the agreement to protect yourself and ensure you will not lose the vehicle.

Do note that if you file the reaffirmation agreement, you must make all the outstanding payments. You cannot have them discharged in the bankruptcy. This information is only intended to educate and should not be interpreted as legal advice.