Facing debt in California while worrying about losing your car can feel overwhelming. When do you have to surrender your vehicle in a Chapter 7? You may have to surrender your vehicle during a Chapter 7 if your equity exceeds California exemption limits, you are behind on payments, or you choose not to reaffirm or redeem your car loan. Additionally, to retain a vehicle in Chapter 7 bankruptcy, the vehicle must typically be necessary for you to maintain a job or household. Vehicles that depreciate rapidly may have little to no equity as time goes on, affecting retention during bankruptcy.
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Frequently asked questions
When do you have to surrender your vehicle during Chapter 7 in California
You may need to surrender your vehicle after the 341 meeting if your equity exceeds exemption limits or you are behind on payments.
Can you keep your vehicle if you are current on payments
Yes, if your equity is within the exemption limits and you stay current, you may keep your vehicle.
What happens if you do not reaffirm your car loan
The lender may repossess your vehicle after your discharge if you do not reaffirm and continue payments.
What if your vehicle’s equity exceeds the exemption limit
The trustee may require surrender or payment of the non-exempt equity to protect creditors.
Is Chapter 13 better if you want to keep your vehicle but are behind on payments
Yes, Chapter 13 allows you to catch up on payments while stopping repossession and protecting your vehicle.