How to Keep Your Car During Bankruptcy in Missouri

Filing for bankruptcy can be a daunting experience, especially when you worry about losing essential assets like your car. However, if you're in Missouri, there are strategies to help you retain your vehicle even during bankruptcy proceedings. Understanding your options and the laws governing bankruptcy in Missouri will empower you to make informed decisions.

Understanding Bankruptcy Types in Missouri

In Missouri, the two primary types of bankruptcy for individuals are Chapter 7 and Chapter 13. Each type has specific provisions that may affect how you can keep your car:

1. Chapter 7 Bankruptcy
In Chapter 7 bankruptcy, the process involves liquidating non-exempt assets to pay off creditors. However, Missouri allows certain exemptions that can protect your vehicle.
Missouri has a vehicle exemption of up to $3,000 in equity for a single debtor. This means if the value of your car exceeds this amount, it may be subject to liquidation unless you can exempt the additional equity. If you have no equity or if it's within the exemption limit, you can keep your car.

2. Chapter 13 Bankruptcy
Chapter 13 bankruptcy, also known as a wage earner's plan, allows individuals to reorganize their debts and create a repayment plan lasting three to five years. Under this plan, you can keep your vehicle while making monthly payments to your creditors. You can also catch up on missed payments and may even be able to negotiate the amount owed through a “cramdown” process if your car is worth less than what you owe.

Equity and Exemption Considerations

Understanding the equity of your vehicle is key to determining how to keep it during bankruptcy. To ascertain whether your vehicle qualifies for exemption, evaluate the market value and subtract any loans or liens. Keeping your total equity within Missouri’s exemption limit is crucial.

Negotiating with Creditors

If you're concerned about keeping your car, one effective strategy is to communicate with your creditor before filing for bankruptcy. Often, lenders are willing to work out new payment arrangements or defer missed payments as long as you are proactive in communicating your financial distress.

Reaffirmation Agreements

In Chapter 7 bankruptcy, you might have the option to enter into a reaffirmation agreement. This is a legal contract that states you intend to keep the car and continue making payments, despite the bankruptcy. It’s essential to understand that reaffirming the debt can make you liable for the balance if you default in the future.

Filing Free and Clear

If your car is free of any liens, you have a clearer path to keeping it. Ensure that you file for bankruptcy while understanding the status of your vehicle’s titles and liens. If possible, clear any existing debts on the vehicle before filing.

Consulting a Bankruptcy Attorney

Each bankruptcy case is unique, which is why consulting with a qualified bankruptcy attorney in Missouri is crucial. They can provide personalized advice based on your individual financial situation and help you navigate the complexities of bankruptcy law. They can also help you understand Missouri’s exemptions and how they apply to your assets.

Final Thoughts

Keeping your car during bankruptcy in Missouri can be a complex process, but it's certainly achievable with the right knowledge and support. By understanding your bankruptcy options, evaluating your vehicle’s equity, and seeking professional guidance, you can safeguard your transportation while working towards financial relief.