Between the Swift Orange Line and the Zip Shuttle, you can get around Lynnwood pretty easily. Although we have great public transportation options, it's hard to go anywhere west of Edmonds College and east of Mill Creek. This means you really do need a car to get around Lynnwood.
Our experienced bankruptcy attorneys understand how important it is to keep your vehicle in the city. If you're wondering how to deal with missed payments on your car or want to keep your vehicle during bankruptcy, we can help. Call our Snohomish County law offices today. Our lawyers in Lynnwood will review your case for free and help you fight to keep your car.
Will Bankruptcy Cancel My Car Loan?While filing for bankruptcy does not immediately cancel your car loan, it does help you find relief. In Chapter 7 bankruptcy, the remaining balance on your car loan can be discharged, which means you wouldn't owe it anymore. However, you may need to give up the car unless you reaffirm the debt and agree to continue making payments. Under RCW 6.15.010, Washington State allows certain exemptions for property, so if you reaffirm the loan, you can keep the car. In Chapter 13, your loan is typically restructured and paid over three to five years as part of a court-approved repayment plan. This means you have time to catch up on payments or reduce the loan balance if needed.
Does Bankruptcy Stop Repossession In Washington State?Yes, filing for bankruptcy in Washington State immediately triggers the automatic stay under 11 U.S.C. § 362, which halts most collection actions, including repossession. Once you file for bankruptcy in Snohomish County, whether Chapter 7 or Chapter 13, the lender must stop trying to repossess your car. The stay is temporary in Chapter 7, and you must reaffirm the loan or catch up on payments if you want to keep the car. In Chapter 13, you can continue making payments as part of your repayment plan, which usually protects your car from repossession throughout the bankruptcy process.
Do I Get To Keep My Car In Bankruptcy?There are ways to keep your car in bankruptcy, depending on the value of your vehicle and the type of bankruptcy you file. In Chapter 7, Washington State's exemptions under RCW 6.15.010 protect a certain amount of equity in your vehicle. You can typically keep your car if its equity is below the exemption limit. If it exceeds the exemption limit, the bankruptcy trustee might sell the car and use the money to pay creditors. However, when you file for Chapter 13 bankruptcy in Snohomish County, you can usually keep the car as long as you include it in your repayment plan and can keep up with the payments. The automatic stay (as outlined in 11 U.S.C. § 362) also protects your car while you're in bankruptcy.
Our Lynnwood Bankruptcy Attorneys Answer Your FAQsA: If your car was repossessed before you filed for bankruptcy, the automatic stay (RCW 11.76) may allow you to reclaim your car, depending on the circumstances. If the car was sold after repossession, you may be entitled to recover any excess proceeds from the sale. In Chapter 13, we may be able to work out a plan to return the car or reduce the debt you owe.
A: Yes, you can finance a car after filing for bankruptcy in Washington State, though it may be more difficult, especially if you just filed a Chapter 7 case. After filing for bankruptcy, it's important to start rebuilding your credit, but some lenders specialize in "subprime" loans for people with bankruptcy in their history. In Chapter 13, you may have better luck financing a car while your repayment plan is in place, as the court will approve certain loans during the bankruptcy process.
A: It depends. In Chapter 7 bankruptcy, if you lease a car and want to keep it, you must continue making your lease payments. If you're behind on payments, the automatic stay (RCW 11.76) can temporarily stop repossession, but you must bring your payments up to date. If the value of the lease is higher than what you can afford, or you don't want to keep the car, you can reject the lease during bankruptcy and walk away from the car without owing the remaining balance.
A: Yes, redemption is an option in Chapter 7 bankruptcy when you owe more on your car than it's worth. Under Section 722 of the Bankruptcy Code, you can pay the current market value of the car instead of the loan balance, which is called redemption. Redemption is best for cars with high loan balances relative to their value.
A: Yes. If you're behind on your payments or owe more than the car is worth, we can work with the bankruptcy court to reduce your loan balance (known as a "cramdown"). A cramdown is when you extend the loan period to make the payments more manageable. The goal is to help you keep your car while paying what you can afford.
A: Yes, even if your car's value exceeds the exemption limit (which is $15,000 for a car in Washington State), you can still keep it in Chapter 13 as long as the value is included in your repayment plan. While you will need to repay the equivalent value of the car over the life of the plan, typically three to five years, you won't lose your car. You can retain it while working through your financial obligations.
If you're worried about losing your car, our Lynnwood bankruptcy attorneys are here to help. Contact us now for a free consultation, and we'll help you stay on the road.