When you file for bankruptcy, one of your biggest concerns is probably your car. You need it to get to work, pick up your kids, and handle the daily responsibilities that keep your life moving forward. The good news is that bankruptcy doesn’t automatically mean you lose your vehicle. Many people successfully keep their cars through the bankruptcy process, especially if they take the right steps early on. Discussing your bankruptcy options with Kain + Henehan, bankruptcy attorneys from St. Cloud, Minnesota, can put you on the right track.
Joint Ownership Creates Special Challenges
When two people jointly own a vehicle, the bankruptcy process becomes more complicated. If only one spouse files for bankruptcy, the other spouse’s interest in the car still exists. The bankruptcy trustee will look at the entire vehicle and both owners’ stakes in it.
Having both spouses file jointly protects the vehicle, since it treats it as joint property and allows you to use each spouse’s exemptions. However, you have to pay attention to the specific details of the arrangement and your bankruptcy filings. It’s the details, like who is listed on the title, that can make a big difference in how well your car is protected.
Joint ownership also matters if one spouse has significant debt and the other doesn’t. The creditors of the spouse filing for bankruptcy might have claims against the vehicle even though the other spouse also owns it. This is why it’s critical to discuss your exact situation with us before filing.
Reaffirmation Agreements: Keeping Your Car
If you don’t own the car outright and still have a loan out on it, you may have to sign a reaffirmation agreement. In short, you agree to keep paying the loan throughout and after bankruptcy. You’ll agree to keep the debt on the vehicle in exchange for keeping the vehicle and continuing under the terms of the loan agreement.
It is possible to use a reaffirmation agreement to protect your vehicle, but it is not the default process in bankruptcy. You have several possible options for dealing with vehicle debt, including surrendering the car. Which one you choose is up to you and your legal team.
Many people reaffirm because they need their vehicle. It is simply a way to continue your agreement with the lender outside the bankruptcy process, so you can keep the vehicle you need.
Surrender vs. Keep: Making the Right Choice
While there are options to let you keep your vehicle, you don’t have to. Unless you really need that specific vehicle, surrendering it is a real option.
Keeping the car means reaffirming the loan and continuing payments. This works well if the vehicle is reliable and the payment is manageable after your other debts are eliminated.
Some people don’t realize they have options. They assume bankruptcy means losing everything. That’s not true. We help you evaluate whether keeping or surrendering makes sense for your specific financial situation.
Contact Kain + Henehan to Protect Your Vehicle
Protecting a jointly owned vehicle in bankruptcy is a complicated decision. You are not wrong for wanting to keep your car, but you do have options. Weighing those options is important if your car is a substantial part of your debt. Before you make any decision, discuss your options with bankruptcy attorneys at Kain + Henehan to help you make the right choice.
Contact Kain + Henehan at (612) 438-8006 or by filling out the online form. We’ll review your financial situation and help you decide which option is best to handle your vehicle debt.