Have you been struggling to decide if you should file bankruptcy in Virginia? Have you been struggling with your debt for quite some time and want to get a fresh start? Maybe you have considered other options and feel like bankruptcy is your best option. But there may be one thing holding you back. Your vehicle. Will you lose your vehicle if you file bankruptcy in Virginia? We will cover that and more.
Do you Qualify for Bankruptcy in Virginia?
Before making any decisions about bankruptcy, something you should consider is if bankruptcy is the right option for you. And if it is, do you qualify? If you want to know if you qualify for a Chapter 7 bankruptcy specifically, you can use the means test calculator. In the calculator it can show you if you may qualify as well as an estimate of how much bankruptcy will cost in Virginia.
You can also consider other options besides a bankruptcy, which would not include your vehicle or other assets. These options would look at your debt from credit cards, medical bills, and some personal loans. The loans cannot be backed by any collateral to be included in these other options. You can consider a debt consolidation loan, debt settlement program, or a debt management plan.
Is my Vehicle Protected in Bankruptcy in Virginia?
When you file for bankruptcy, your assets become a part of the “bankruptcy estate.” This means that your trustee can use non-exempt assets of the bankruptcy estate to pay off your unsecured creditors.
Unsecured debt examples are:
- Medical bills
- Credit card debts
- Personal loans
- Judgments
How Does the Trustee Determine the Value of my Vehicle?
You may be wondering under what circumstances your car would be sold or not sold in a bankruptcy. How does the trustee figure out what your car is worth?
They will look at:
- The make and model
- How old the vehicle is
- What condition it’s in
- The miles
- The crash history
What is the Auto Exemption in Virginia?
The automobile bankruptcy exemption in Virginia is $6,000. In a bankruptcy, there are state and federal exemptions. In Virginia specifically, you are not allowed to use the federal exemptions. This means they set the exemption for the state and that is what applies to you. Another thing to mention is that in order to file bankruptcy in Virginia, you will have had to live there for a specific amount of time.
If you’re worried about your vehicle in a bankruptcy, just know many people file and are able to keep their vehicles. The trustee would not go through the time and effort of selling the vehicle if it was not worth the hassle. However, this does not apply for every case. If you are worried about losing your vehicle and it is over the exemptions, potentially looking at other options can be helpful.
What are Other Debt Relief Options?
If you are worried because you do not qualify for a chapter 7 or you will lose your vehicle in a chapter 7, do not worry! You can consider other options such as chapter 13, debt settlement or debt management.
Chapter 13 Bankruptcy
A chapter 13 in Virginia would be a wage earner’s bankruptcy where you have a set monthly payment plan that you follow. This typically ranges over the course of 3-5 years. The monthly payment will be based on what the attorney calculates you can afford to pay monthly. This option can definitely be more expensive, but can be helpful if your assets are over the exemptions in Virginia.
Debt Settlement:
Another option to consider is debt settlement where a company would negotiate with your creditors to try and bring your debt amount down to about 50% of what you owe. There are fees associated with this option and other cons to consider. For example, you do not have automatic legal protection in a settlement program. That means your creditors do not have the legal obligation to agree to the settlement terms.
Debt Management
Debt management can be helpful if you are looking to lower your interest rates. You will end up paying the total debt amount back still, but they will help bring your interest rates down. They usually aim to bring them down to about 7-9%.
Conclusion
In conclusion, I hope you have a better understanding and idea of what may happen to your vehicle in a chapter 7. You do not automatically lose your vehicle if you decide to file bankruptcy. However, if you are afraid of losing it, consult with an attorney in a free consultation. You can also consider other debt relief options if your vehicle is at risk.