How are car loans treated in bankruptcy?

This is Omaha and Lincoln Attorney Burke Smith answering a question regarding “How are car loans treated in bankruptcy ? And in talking with clients I'm usually talking with somewhat somebody in one of two situations either they really want to keep their car which is most people because that's the only way they’re gonna be able to go to work , get their kids to school, engage in life and the other extreme which does happen is somebody is way upside down on their car loan and they really don't want to keep the car In the first situation absolutely you can keep your car and the car loan is usually treated in one of two ways

In most situations with most regular banks, you keep the loan and keep making payments on it after the during and after the bankruptcy is completed doing that you get to keep your car and if you fall on hard times afterwards you can let the car go and not have any personal financial liability on it On the second situation regarding keeping your car usually if you have a loan with a credit union the credit union will require that you sign what is called a “Reaffirmation Agreement "that has the effect of taking that car loan out of the bankruptcy and not only do you keep the car and you make payments on it but the credit union actually reports those payments to the Credit Reporting Agency which can have a positive effect on your credit score In the other situation where perhaps the loan is owe much more than what the car is worth and oftentimes when a person's traded in a car once or twice older loans are put on top of it what's called “Negative Equity” a person doesn't want to keep that car and still make those payments In bankruptcy is a perfect time to clean your financial house from top to bottom in being able to let that car go and not have any negative repercussion is a perfect solution to that problem So if you have other debts including a bad car loan bankruptcy is a very useful and effective way to take care of that

If you have other questions about this and need some additional information please give me a call at 402 718 8865

Source: Youtube

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