How to Keep My Car, Bankruptcy Options
As long as payments are current, debtors may reaffirm car notes in Chapter 7 (with lender and court approval), or include vehicle notes within the plan in Chapter 13. Few lenders contest reaffirmation proposals. The most difficult proposition is how to keep my car in bankruptcy Chapter 7 when payments are past due. Lenders rarely agree to reaffirmation agreements when payments are past due, and the few who do almost always require substantial additional collateral. When payments are past due and keeping your car is essential, Chapter 13 allows all past due payments to be included with the plan which are then presumed current.
The trade off
Most people prefer Chapter 7 because quickly eliminates all debts without further payment. Occasionally, debtors file Chapter 13 to gain protection of the plan, then, once important debts are paid current over weeks or months, convert their Chapter 13 case to Chapter 7. All debtors are granted an absolute right to convert to Chapter 7 by the code, so long as each conversion conforms with Chapter 7 qualification criteria. The right to convert cannot be waived in security agreements.
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