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Will filing for bankruptcy pay off my car loan?
I have a car loan with a balance of about $18,000, but I'm also struggling to meet my other debt obligations. I thought about filing for bankruptcy. Will this pay off my car loan?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“That’s a tough situation to be in, Unfortunately—contrary to popular belief—filing for bankruptcy will not pay off your
car loan
. However, you may be able to keep the car if you meet certain criteria.In Chapter 7 bankruptcy, you can keep the car if you have less equity than the exemption limit. For example, your state’s exemption limit might be $5,000, so if you have $4,000 in equity, you can keep the vehicle. Or if you keep up to date on payments, you may also be allowed to keep the vehicle.
If neither of these situations applies, your court-appointed trustee may sell the vehicle to pay debtors and give you the remainder of the proceeds from any positive equity you may have. Otherwise, you may have to surrender the vehicle to the lender.
If you manage to keep the car, you can save more money by switching your car insurance with the
Jerry
app. Jerry will let you compare quotes from up to 50 top carriers to find the insurance that works for you. The best part? Most Jerry users save up to $900 a year on car insurance.” View full answer
- Gregory R.
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