Connecticut Bankruptcy: Can You Keep Your Car After Filing?

Filing for bankruptcy can be a daunting process, especially when you're concerned about retaining your assets, such as your car. In Connecticut, understanding the implications of bankruptcy on your vehicle is crucial for anyone considering this legal route.

When you file for bankruptcy in Connecticut, you typically have two options: Chapter 7 and Chapter 13. Each chapter has different rules and outcomes regarding asset retention, including vehicles.

Chapter 7 Bankruptcy: This form of bankruptcy involves liquidating non-exempt assets to pay creditors. However, Connecticut offers certain exemptions that might allow you to keep your car. The state law allows a motor vehicle exemption of up to $15,000 in equity. This means if your car's equity is below this amount, you can generally retain it. If your vehicle is worth more than this exemption, you may need to negotiate with the bankruptcy trustee or consider other options.

Chapter 13 Bankruptcy: This chapter is often referred to as a reorganization bankruptcy. It allows you to keep your assets while creating a repayment plan to pay back a portion of your debts over three to five years. In Chapter 13, you can usually keep your car as long as you remain current on your payment plan. The plan will account for your car loan, enabling you to make manageable payments while protecting your vehicle from repossession.

In both types of bankruptcy, it’s essential to consider the status of your car loan. If you are behind on payments, the lender may have the right to repossess your vehicle, regardless of the bankruptcy process. Therefore, staying current on your payments or negotiating with your lender may be essential to retain your vehicle.

What About Leased Vehicles? If you are leasing your vehicle, the rules differ slightly. In most cases, you cannot assume a lease in bankruptcy, meaning you might have to return the vehicle. However, if you are interested in keeping the leased vehicle, you might need to negotiate with the leasing company to determine if you can buy it out or assume the lease under new terms.

Consulting a Bankruptcy Attorney: Navigating the intricacies of bankruptcy law can be complex. It is highly advisable to consult with a bankruptcy attorney who is well-versed in Connecticut laws. An attorney can provide personalized advice, help you determine your best course of action, and ensure you're making informed decisions throughout the process.

In conclusion, whether you can keep your car after filing for bankruptcy in Connecticut largely depends on the type of bankruptcy you choose and the equity in your vehicle. Understanding your rights and options is vital in making the best decision for your financial future.