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From twilight drives through historical Old Town Fort Collins, to visiting Horsetooth Mountain Open Space, Fort Collins is a perfect city to experience from behind the wheel of your car.
With the rising cost of cars, trucks, and vans, chances are good that if you’ve bought or financed a car in Larimer County, your vehicle is a vital part of your life, not just for travel through gorgeous Larimer County, but to get to and from work, or to see family as well. Falling behind on bills may put that car in jeopardy, which you can probably ill afford.
Bankruptcy is the legal process through which people can find relief from creditors through the discharge or repayment of their debt. If you find yourself in dire financial circumstances, bankruptcy can help you get back on track. Our experienced Fort Collins bankruptcy attorneys have helped many clients in Larimer County that are struggling with debt find relief through Chapter 7 or Chapter 13 bankruptcy.
Many people who contact our Fort Collins debt relief attorneys are worried that they’ll lose their car if they file for bankruptcy. This is a myth perpetuated by creditors and financers who don’t want you to seek debt relief through bankruptcy. Our Larimer County bankruptcy attorneys have designed this website to provide information for car owners who are thinking about filing for Chapter 7 or Chapter 13 bankruptcy and are worried about how they can save their cars.
If you are financing your car and it has recently been repossessed due to nonpayment, all hope is not lost if your goal is to get your car back. Filing for Chapter 13 bankruptcy can help you reclaim your vehicle. Filing a Chapter 13 bankruptcy can force the car lender and repo company to return the vehicle immediately provided the bankruptcy is filed within 21 days of the repossession.
Filing Chapter 13 bankruptcy, also known as a “wage earners bankruptcy,” or a “reorganization bankruptcy,” may also be beneficial for Fort Collins residents who still have their car, but may be in danger of having it repossessed.
When you file for Chapter 13 bankruptcy in Larimer County, all of your debts are compiled or restructured into one lump sum, which you will make payments on through a court-appointed bankruptcy trustee. That means that any arrears (or past-due payments) you owe on your car are now a part of your bankruptcy repayment plan. If over the course of the 3 to 5 years that the Chapter 13 repayment plan lasts, you can manage to pay both your bankruptcy payment and your current car payments, you can keep your car.
Of course, not everyone wants to keep their vehicle when they file for bankruptcy. Surrendering your vehicle allows you to give the vehicle back to the lender. This can be a great option in some circumstances, such as your car being badly damaged and in need of costly repairs that you can’t afford to make, or you can no longer afford the payments on your car due to loss of employment. The advantage of surrendering the vehicle is that you do not pay for the full amount of the loan or worry about selling the vehicle yourself. The lender will have to resell the vehicle, however, you will be on the hook for whatever deficiency remains once the vehicle is sold.
Chapter 7 bankruptcy is the most commonly filed bankruptcy petition in Colorado. It’s such a popular choice because, if you qualify for chapter 7 bankruptcy in Colorado, all of your dischargeable debts will be wiped out. This includes not just credit card and medical bills, but also the debt you may owe on your car if you’ve financed a vehicle in Larimer County.
During a Chapter 7 bankruptcy, the Federal Bankruptcy Court appoints a trustee to your case. The trustee’s job is to gather all of your non-exempt assets and liquidate them. The funds from the liquidation are then used to clear your priority debts. At the end of your Chapter 7 bankruptcy case, any remaining unsecured debt you have remaining is then discharged (or cleared) by the bankruptcy court.
But let’s say you already own your car, free and clear. You may be wondering if Chapter 7 bankruptcy can still help you save your car. The answer to that question is yes, and the reason is Colorado state exemptions. An exemption is a law that protects your property when you file for bankruptcy. Basically, bankruptcy exemptions level the playing field so that getting a fresh start doesn’t require you to start from scratch. Colorado’s motor vehicle exemption allows Larimer County residents to protect up to $7500 in equity, which increases to $12,500 if the filer is elderly or disabled, $15,000 if the filer is married, and up to $30,000 if the filer uses the vehicle for work.
That means if your car is worth less than $7500, it’ll be protected from liquidation. If you happen to own a newer vehicle worth more than the exemption amount, you should know that your car may be liquidated during bankruptcy, however the equity limit (in this case, $7500) will be returned to you once the vehicle is sold, and you can use those funds to purchase yourself a different vehicle.
If you are financing a car, Chapter 7 bankruptcy may still be a viable option for you. Thanks to the automatic stay we spoke about in the previous section, your financed vehicle is safe from repossession for the duration of your bankruptcy case. However, Chapter 7 bankruptcy does not cover all money owed on a vehicle, just past due payments you may have missed. Discharging a Chapter 7 bankruptcy will clear past missed payments, however, if you still owe money for future car payments you will be responsible for covering those if you wish to keep possession of your vehicle. Chapter 7 may not be the best option for you if you need a longer period of time to catch up on your car payments, as most Chapter 7 bankruptcy cases only last 4 to 6 months from start to finish.
Imagine trying to live your life without a vehicle. How would you get to work, run errands, or even just enjoy a short jaunt on the open road? Living in the Western United States has its advantages, and one of the biggest advantages is being able to take advantage of wide open spaces
If you’re worried about losing your car to repossession because of unmanageable debt, it’s time to consider your options. Nobody deserves to live in constant fear that a stranger is going to walk onto their property and take their vehicle, but that’s essentially what repossession is.
Besides your home, your car is often your most necessary asset. As you can see, you don’t have to be concerned that you will lose it if you file for bankruptcy. While there are circumstances that may cause you to have to give up your vehicle to cover your debts, in most cases, people in bankruptcy can keep their car as a part of their fresh start.
Don’t let the false narrative that you’ll lose your car to bankruptcy keep you from seeking the debt relief you need. Contact our Fort Collins bankruptcy attorneys today to discuss how we can help you drive off into the sunset and leave your debts in the dust.