Maryland residents may ask the court to exempt their vehicles when filing for bankruptcy. Your car’s value and the amount left on an auto loan may determine whether you could keep it. The type of bankruptcy you file may also affect your ability to protect your vehicle.
Section 11-504 of Maryland’s Courts and Judicial Proceedings code allows residents to exempt personal property up to $5,000. If your car’s equity does not exceed $5,000, bankruptcy may not affect it. You may find whether your vehicle’s value falls within the exemption limit by subtracting your loan balance from your car’s market value. If the dollar amount does not exceed $5,000, you may keep your car.
Keeping vehicles with loans in Chapter 7 bankruptcy
As noted by Experian.com, bankruptcy petitioners must show that they have not fallen behind on car payments. A delinquent auto loan may result in repossession, and bankruptcy may not protect it. If you could catch up on past-due payments, however, you may keep your vehicle.
As explained by Bankrate.com, you may contact your vehicle loan servicer and request a reaffirmation agreement. A Chapter 7 bankruptcy discharges most consumer debts, but the court may accept a confirmation that you and your vehicle lender intend to continue with your financial arrangement. In some cases, lenders may use the reaffirmation process to change their borrowers’ monthly payments.
Working out a payment plan in Chapter 13 bankruptcy
Borrowers with steady income may use bankruptcy to reassess debts and pay back creditors with one affordable monthly payment. Based on the payment plan that you arrange through the court, a Chapter 13 bankruptcy may provide you with an option to keep your vehicle.
Individuals residing in Maryland may exempt personal property including cars worth up to $5,000. Depending on your circumstances, you may keep your vehicle with a Chapter 7 or Chapter 13 bankruptcy.