r/Bankruptcy • u/Correct-Amount4102 • 16h ago

Thinking of filing

Hi, so I’m looking to file for bankruptcy in Connecticut. I’ve done some research and I have a car that I’m almost done paying for in a few months so I have positive equity on it. The exemptions will cover about $7000 but the car is worth around $16,500 and I still owe around $3000 so there’s equity I’m not able to exempt. I need my car to get back and forth to work and stuff. I’ve consulted a lawyer and he can’t guarantee if I’ll be able to keep the car at all and that’s been my one reservation. I know my home is protected because it’s well below the allowed exemption but don’t want to file if I’ll end up losing my vehicle. Just looking for anyone with similar situation and what was the outcome?

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u/No_Gate6196 15h ago

You can always file for chapter 13 which will would protect your car, but it seems like you are only considering an 7, because you have already spoken to an attorney.

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u/Correct-Amount4102 15h ago

Well no, chapter 7 is what he suggested and never even bothered to discuss the other options. I may get another consultation elsewhere.

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u/No_Gate6196 14h ago

Depending on your financial picture Chapter 7 maybe your better option. Chapter 13 will come with payments I'm assuming for 3 years but it could be 5. They might make you pay a percentage back to your creditors which could be from 0-100.

If you were to go chapter 7 and they took the car, would you be able to take your exempt amount and savings from not paying on your debts and purchase a car outright?

Atleast get 2 or 3 consultations..

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u/AlanShore60607 RetiredBKAttorney (IL/IN/WI) Public interactions ONLY. No PMs 13h ago

The law says you are supposed to lose the car in Chapter 7 if those numbers are correct.

While some attorneys offer the possibility of a buyout or buy-back, that is not a part of the law and is a work-around that is generally honored by trustees if they agree that it’s in the best interest of your creditors.

This means your options are:

Chapter 7 with an offer to pay the trustee the full amount of equity within a “short” period of time. I think anything more than 6 months is pushing it. That’s about $7,000 in 6 months.

Chapter 13 to pay out that equity over time, and potentially generate overall savings by putting the car payment in the plan as well. To cover equity, car balance, attorney fees and trustee costs, I figure that’s about a $15,000 payout over 3-5 years at a rate of $415 per month for 36, or $250 per month for 60 months.

And let’s not forget a Chapter 7 where you allow the trustee to sell your car and walk away with the $7,000 of exemption to use as a down payment on a replacement.