Can I keep my car in bankruptcy in Maryland?

There are a number of ways that individuals can get free from debt. If they choose to file Chapter 7 bankruptcy, they may be relieved of all of their unsecured obligations. Each petitioner is allowed to keep certain property exempt during the bankruptcy process. This means that they can protect their home, car, furniture and other personal possessions.

Maryland Bankruptcy Exemptions

The exemptions bankruptcy Maryland does not specifically address personal vehicles. Instead, the individual filing for bankruptcy can choose to use the Maryland “wild-card” exemption. This applies to any cash or personal property up to $6,000 in value. If the debtor chooses to use federal bankruptcy exemptions instead, they can exempt their motor vehicle up to $3,450. Unfortunately, they cannot mix and match exemptions. They must choose either the Maryland State exemptions or those allowed under federal bankruptcy law.

Keeping Your Vehicle During Maryland Bankruptcy

Most people who file for bankruptcy are successful in keeping their vehicle during the process. There are three different types of ownership that must be taken into consideration. How the vehicle is regarded may depend on whether the car is financed, leased or the petitioner has paid off the car and owns the vehicle outright. People who are leasing a car may choose to continue making payments or they can turn the car back in if the monthly amount is too high. Those who own their vehicle usually retain it after bankruptcy. Rarely does a Trustee take this asset and sell it.

Those who are still making loan payments can choose to reaffirm their auto loan. Individuals must be current and can prove that they can afford to make car payments once their bankruptcy is over. If they choose to redeem the car back from the bank, they must pay the lender the fair market value of the vehicle, rather than what is still owed on the loan. This can be a good arrangement if the person owes more than what the vehicle is worth.

Seeking Legal Guidance from a Maryland Bankruptcy Attorney

Bankruptcy laws can be confusing and deciding which path to take can be difficult. If you are considering filing for bankruptcy, you should obtain legal advice from a skilled attorney who can examine your specific financial situation and make a recommendation best suited to your needs.