I often get clients who have cars and car payments they can no longer afford. They ask me how bankruptcy can assist them with their car payments. Typically under a Chapter 7 (Miami or Fort Lauderdale Case) a debtor doesn’t have many options regarding their vehicle they can do one of the following:
KEEP THE CAR
If the debtor wants to keep the car then they will likely have to sign a REAFFIRMATION agreement. The reaffirmation agreement basically says that the debt on the car survives bankruptcy and the debtor is responsible for the payments after the bankruptcy is complete. If the debtor signs the reaffirmation agreement and falls behind on the car, the creditor is allowed to sue the debtor and or to repossess the vehicle.
SURRENDER THE CAR
In a Chapter 7 the debtor has the ability to surrender the vehicle to the creditor without having to pay a deficiency. This feature is especially good for debtors who are completely upside down on their car or have high interest rate loans. In the case of surrendering the car the debtor can usually just drop it off at the dealership or have someone come pick it up.
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