Debt can feel like a hole you just can’t climb out of. As you struggle to pay off credit cards each month, more and more interest will accrue. That’s why many turn to Chapter 7 bankruptcy as a way to escape overwhelming debt. But you’ll need to know how to file bankruptcy and keep your car since losing important assets can leave you even more financially vulnerable.
At Integrity Law Group in Seattle, we understand the stressful, seemingly impossible situation you’re in. No one wants to file for bankruptcy. Fortunately, it doesn’t have to mean financial ruin the way it’s often thought to. Bankruptcy can be a lifeline. It can help you start fresh. Our team is committed to helping you get that fresh start, guiding you on how to file for bankruptcy and keep your car.
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Comparing Chapter 7 vs. Chapter 13
The two most common types of bankruptcy are Chapter 7 and Chapter 13, with Chapter 7 being the most common. These different options come with distinct pros and cons. One isn’t better than the other, but one might be better for your unique circumstances.
In general, Chapter 7 is best for those who have minimal assets or wealth and need relief from debts they cannot pay. Alternatively, Chapter 13 suits individuals who have a steady income and assets to protect and just need some extra time and assistance paying off their debts. Let’s look at each of these options in more detail.
Chapter 7 Bankruptcy: Debt Relief with Asset Liquidation
With Chapter 7, you can get a clean slate from most of your debts. The filing process usually takes a few months, and in the end, most of your unsecured debts are discharged so you can get a fresh start. But first, if you have any non-exempt assets, these will be sold to pay off as much of your debt as possible.
That’s why many people worry about losing their car if they file for Chapter 7 bankruptcy. Valuable real estate, vehicles, and belongings may be liquidated by the trustee assigned to your case. However, many of your assets will be exempt from this liquidation. Anything considered necessary for your work and a basic standard of living is typically exempt. A house and one vehicle below a certain equity level are usually safe from liquidation. If you have more than one car, however, or a particularly valuable car, it may not be exempt.
Chapter 13 Bankruptcy: Long-Term Repayment Plan
When you file for Chapter 13, you won’t have to worry about asset liquidation, but you may have to pay a portion of your debts. Instead, you will get assistance restructuring your debts and creating a realistic, long-term repayment plan. This plan needs to repay some or all debts, typically within three to five years. Once it’s complete, most, if not all, of the remaining debts will be discharged.
While the fast debt discharge of Chapter 7 might sound more appealing, Chapter 13 has its own advantages. First, none of your assets will be liquidated. There is no concern about losing your car or your home. Second, Chapter 13 doesn’t stay on your credit report as long, and it’s often easier to recover from. Keep in mind that for both types of bankruptcy, some types of debt cannot be discharged, such as alimony and child support.
How to File Bankruptcy and Keep Your Car
So now that you know the differences between Chapter 7 and Chapter 13 bankruptcy, let’s revisit the question of how to file bankruptcy and keep your car. The most guaranteed path for keeping your vehicle and other belongings is to file Chapter 13 since it does not involve any asset liquidation.
However, it is very possible to file for Chapter 7 bankruptcy and still keep your car. In fact, most people who file for Chapter 7 have very few or no non-exempt assets, so they don’t end up losing any of their belongings. The best way to make sure you keep your car when navigating bankruptcy is to work with an experienced lawyer who can guide you through the process. At Integrity Law Group, we partner with you to make sure you come out the other side of bankruptcy successfully and have the resources to rebuild your financial health.
Other Considerations for Chapter 7 vs. Chapter 13
There are two other main points to keep in mind when deciding between Chapter 7 and Chapter 13 bankruptcy.
The Chapter 7 Means Test: To qualify for Chapter 7, you must pass a means test that shows you have insufficient income or wealth to repay your debts. If your income is below the median average, you automatically qualify. If it isn’t below the average, you’ll need to calculate your disposable income to determine if you pass the means test. Our team can help you with this.
Impact on Credit Score: Don’t overlook the long-term ramifications of filing for bankruptcy. A clean slate in just a few months is great up front, but bankruptcy harms your credit score, which can make it difficult to get loans or credit cards. Chapter 7 bankruptcy stays on your credit report for up to 10 years, while Chapter 13 usually has a lesser impact and only stays on your report for up to seven years. Our team offers continuing support and guidance after bankruptcy to help you repair your financial well-being.
How a Bankruptcy Attorney Can Help
As your bankruptcy attorney, our job is to make the bankruptcy process a little easier and ensure you come out the other side thriving. We can offer you personalized guidance when choosing between Chapter 7 and Chapter 13. Then, no matter which type of bankruptcy you file for, we’ll be there every step of the way to ensure the best outcome.
We know how to help you keep your car when you file for bankruptcy. Without a lawyer’s expertise, many people face unnecessary losses and obstacles in their bankruptcy process simply because they’re unfamiliar with the laws and don’t know the best strategy. At Integrity Law Group, we help you make the most out of an unfortunate situation and get the fresh start you deserve.
Contact Integrity Law Group Today
When it comes to protecting your belongings and future when you file for bankruptcy, the best choice is to work with an experienced lawyer. Our team at Integrity Law Group has the dedication and expertise you need to successfully navigate bankruptcy. Contact us today to schedule a consultation with a bankruptcy attorney in Seattle!