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When one files a bankruptcy, one has to
decide whether or not to keep their vehicle. You can usually discharge all of
your debt in a Chapter 7 Bankruptcy. When you discharge the debt, however, the
secured creditor still retains a lien on the vehicle just like a bank would
retain a mortgage on a home.
If one wishes to keep the vehicle, one
would have to provide proof of insurance to the lending institution and also
name them as loss payee on the insurance policy. Additionally, one would have to become current on all
pre-petition arrearages on the loan before the lending institution would agree
to sign a reaffirmation agreement. A
reaffirmation agreement is a contract signed by the Debtor and their attorney
obligating the debtor to once again become personally responsible on the secured
creditors claim.
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