Can I Reaffirm and Keep a Vehicle in Chapter 13?
Unlike a Chapter 7 bankruptcy, there is no formal reaffirmation agreement in a Chapter 13 bankruptcy. In Georgia, if you choose to keep your vehicle in a Chapter 13 bankruptcy, the terms of the loan may be changed under certain circumstances. In a Chapter 13, if you purchased your vehicle more than 910 days prior to filing bankruptcy, you can actually propose to pay the creditor for just the fair market value of the vehicle at a reasonable interest rate (normally prime interest rate on the date of filing plus 2 percent normally works in Georgia courts). Even if you purchased your vehicle less than 910 days before you filed Chapter 13, you can still propose to lower your interest rate to a reasonable rate in your Chapter 13 plan. Since car payments are normally included in your monthly Chapter 13 payment to the trustee, you would not actually make a separate car payment to the creditor.
On the other hand, in a Chapter 7, in order to keep a car, you have to sign a reaffirmation agreement with your car creditor under the same terms of your original loan agreement and continuing making the same monthly payment that you made prior to filing bankruptcy. Thus, Chapter 13 may be more advantageous for you if you purchased your vehicle more than 2.5 years ago at a high interest rate and owe more money on the vehicle than it is worth and if you your monthly car payment is higher than you can afford to pay.
If you have questions regarding keeping your car in bankruptcy or the differences between Chapter 7 and Chapter 13, please contact the Law Offices of Charles Clapp at (404) 585-0040 to schedule a free consultation.