You may have heard that you can use chapter 13 bankruptcy as a means to get control of your debts and repay your mortgage and car note in a manner that allows you to keep your assets. 

In most cases, this is true! In this blog, we are going to explain to you how Chapter 13 bankruptcy works and how you can keep your car and other assets through this bankruptcy chapter.

What is Chapter 13 Bankruptcy?

Chapter 13 is a chapter of law within the United States bankruptcy code that is designed to get you through tough economic times. Maybe you have lost your job or run into unexpected medical bills, chapter 13 can help you get your life back on track.

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In Chapter 13, your are able to combine all of your debts into low monthly payments that are affordable to your current budget. It is important to note that you need disposable income in order to file chapter 13. That means that you need to be able to have a little money left over each month after you pay your living expenses like food, clothes, and utilities.

How can Chapter 13 save my assets?

Chapter 13 also puts an automatic stay on your debts to keep creditors from harassing you and repossessing your personal property. This is why chapter 13 can help you save your car. You can save other assets in Chapter 13 like your house, and this can be a way to get your life and finances back on track without losing all your assets.

Once in Chapter 13, we can set up a plan that will allow you to pay off your debts at an amount that is affordable to you. Chapter 13 bankruptcy can also keep you from being upside-down on your car again. This is because your new car payment will be determined on the fair market value of the vehicle today. If you owe $20,000 on a car that is only worth $13,000, you will be able to lower the amount owed to just the current value of the car, allowing you to keep your car at a price that is affordable, assuming you have owned the car for at least 2.5 years.