Will I have to make regular payments to my creditors in a chapter 7 bankruptcy? 19 Answers as of February 12, 2011

Will I have to make regular payments to my creditors in a chapter 7 bankruptcy? Also, if I file for a chapter 7, will I be able to keep my car?

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Law Offices of Michael J. Berger
Law Offices of Michael J. Berger | Michael J. Berger
One of the great features of Chapter 7 bankruptcy is that you do not have to make regular payments to your creditors in Chapter 7 bankruptcy. In fact, you do not have to make any payments at all to your creditors in Chapter 7 bankruptcy. The thing to look out for is to be sure that all of your assets are exempt. If your assets are exempt, you keep them. If not, they can be taken by the Trustee and sold for the benefit of creditors. By my estimate, 97% of all Chapter 7 cases are no asset cases now.

The type of individual bankruptcy that requires you to make regular monthly payments to your creditors, typically for 3 - 5 years, is Chapter 13 bankruptcy. For a discussion of the differences between Chapter 7 and Chapter 13 and which one might be right for you, call me.
Answer Applies to: California
Replied: 2/12/2011
Gus Johnson Attorney at Law
Gus Johnson Attorney at Law | Gus Johnson
You continue to make payments for secured debt that you elect to reaffirm, you don't make payments to creditors whose debts are discharged.
Answer Applies to: South Dakota
Replied: 1/15/2011
Law Office of Aaron Nielson
Law Office of Aaron Nielson | Aaron Nielson
Payments are not the norm in a Chapter 7 case. Chapter 13 is the most common type of bankrutpcy where you set up a repayment plan. You need to talk to an attorney about what debts will or will not be dischaged in your case. As for the car, that again depends on your facts and you need to discuss the whole case with an attorney. Most of my clients that want to keep their car get to.
Answer Applies to: Washington
Replied: 1/14/2011
Stuart Jon Bierman  Attorney at Law
Stuart Jon Bierman Attorney at Law | Stuart Jon Bierman
Usually, in a Chapter 7 bankruptcy there are no regular payments to creditors.
Answer Applies to: New Jersey
Replied: 1/13/2011
Goodman, Dicus, and Teinert, LLP
Goodman, Dicus, and Teinert, LLP | Scott W. Dicus
A chapter 7 bankruptcy case does not involve the filing of a plan to make regular payments (However, a Chapter 13 plan does involve a repayment plan) Instead, the bankruptcy trustee gathers and sells the debtor's nonexempt assets and uses the proceeds of such assets to pay creditors in accordance with the provisions of the Bankruptcy Code.

The answer to your second question depends on the type of car and the amount of equity you have in it (i.e. whether the Kelly Blue Book value of the car is greater than the amount owed to the lender + the amount of the applicable exemption amount).

If there is no equity in the car, the bankruptcy trustee will not take the car. If there is equity in the car over, and the equity exceeds the amount of the motor vehicle exemption (usually between $1,000 and $5,000, depending on the state you live in), a debtor can usually buy any unprotected equity from the Chapter 7 trustee.

If you still owe money on the car, you can choose to reaffirm the debt to the lender, keep the car, and continue paying under the existing terms; or you can buy the car from the secured creditor in a single payment for its present value (this is called redemption). In some jurisdictions, you don't even have to reaffirm the debt: you can keep the car if you continue to make the payments called for in the contract.
Answer Applies to: California
Replied: 1/13/2011
    Ursula G. Barrios Law
    Ursula G. Barrios Law | Guillermo Machado
    You can keep your car in Chapter7 and make no payments tocreditors you wish to eliminate. Payments are in a Chapter 13.
    Answer Applies to: California
    Replied: 1/12/2011
    Diana K. Zilko, Attorney at Law
    Diana K. Zilko, Attorney at Law | Diana K. Zilko
    It depends on the creditor. If you are reaffirming a loan on a home or car, for example, then yes...you need to make those payments. If you are talking only about credit card debt, then no...you would not make a payment since those debts should be discharged in a Chapter 7. Generally you can keep your car, but it depends on how much equity it has, and what other property you may have that you are trying to exempt. If you have any further questions, please let me know.
    Answer Applies to: California
    Replied: 1/12/2011
    DiManna Law Office, LLC.
    DiManna Law Office, LLC. | Dawn DiManna
    You only have to make payments to secured creditors if you want to keep your car or home. Yes you can keep your car if there isn't too much equity - although there might be other exemptions you can use.
    Answer Applies to: New Hampshire
    Replied: 1/12/2011
    Uriarte & Wood, Attorneys at Law
    Uriarte & Wood, Attorneys at Law | Robert G. Uriarte
    Answer: You need only make those payments to secured creditors for property which you intend to keep. For example, if you want to retain your home, you must keep making your mortgage payments (in addition to curing any arrearage). Also if you intend on keeping a vehicle subject to a security interest, you must make that payment. You need not make payments on your general unsecured debt which is otherwise dischargeable. Lastly whether you may keep your car depends on the equity you have in the vehicle. In most cases, you will be able to protect your vehicle by use of the appropriate exemption(s). Your counsel will advise you what payments to continue making and whether you can protect your vehicle in your particular situation.
    Answer Applies to: California
    Replied: 1/12/2011
    Carballo Law Offices
    Carballo Law Offices | Tony E. Carballo
    Payments are not made to creditors in Chapter 7. You will either pay nothing or be disqualified from doing a Chapter 7 case and be forced to do a Chapter 13 where payments are required depending on your ability to pay. You can keep your car if you can pay for it. Assuming the car debt is reasonable and you need the car, you should have no problem keeping the car so long as you pay for it. Obviously, if you have another car that is owned free and clear and in good working condition the trustee will want to know why you need to keep the unpaid car. Therefore, you might have to justify the debt in order not to be disqualified from obtaining a Chapter 7 discharge. In bankruptcy you always have to be ready to justify any debt that you plan to continue paying since you are asking the court to discharge your other debts. Creditors might also object if you attempt to keep paying for a car that you do not need because you have another comparable vehicle that is not subject to a loan.
    Answer Applies to: California
    Replied: 1/12/2011
    Bankruptcy Law Office of Robert Weed
    Bankruptcy Law Office of Robert Weed | Robert Weed
    You'll have to make regular payments to your car loan company if you want to keep the car. If you have a house, you'll need to make your house payments if you want to keep the house. Other than that, the point of chapter 7 is so you don't have to pay the credit cards or medical bills or repossessions or foreclosures.

    If you are still paying on the car,, you'll need to keep paying if you want to keep it. If it's paid for, whether you can keep it depends on how much it's worth (and what state you are in). If it's worth a lot, the bankruptcy court can sell it.
    Answer Applies to: Virginia
    Replied: 1/12/2011
    Christopher Legal Group
    Christopher Legal Group | Shawn Christopher
    Monthly payments are part of the chapter 13, not a chapter 7. If you qualify for a chapter 7, then most types of credit are simply extinguished.
    Answer Applies to: Nevada
    Replied: 1/12/2011
    DiTocco Law Group, PLLC
    DiTocco Law Group, PLLC | Tony DiTocco
    No, generally in a Chapter 7, unsecured debts are discharged with no ongoing payment obligation.

    Depends on the value of the vehicle and the amount owed. For Instance, in Florida, you can keep $1,000 in net vehicle equity, PLUS up to another $1,000-$5,000 in vehicle equity, depending on your circumstances.

    You should consult an attorney.
    Answer Applies to: Florida
    Replied: 1/12/2011
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    No payments required in chapter 7 and I do not have enough information to answer the second question. Contact NACBA.ORG to find a lawyer near you.
    Answer Applies to: California
    Replied: 1/12/2011
    Law Office of L. Paul Zahn
    Law Office of L. Paul Zahn | Paul Zahn
    No. Chapter 7 bankruptcy is a liquidation and elimination of debts (there are some debts that are not dischargable in bankruptcy). Once the dischargable debts are eliminated, you are no longer obligated to pay any amount to those creditors. If you are looking for assistance with your bankruptcy case, please contact my office for a free consultation.
    Answer Applies to: California
    Replied: 1/12/2011
    Greifendorff Law Offices, PC
    Greifendorff Law Offices, PC | Christine Wilton
    Under Chapter 7 you can usually keep your car so long as you continue to make payments and no, you do not make payments to creditors.
    Answer Applies to: California
    Replied: 1/12/2011
    Law Offices of Steven A. Wolvek
    Law Offices of Steven A. Wolvek | Steven A. Wolvek
    You have to make regular payments for secured items you want to keep - like a house or car. You do not have to make regular payments to unsecured debt. I have a video on my website for new chapter 7 clients that explains this in more detail along with good information under the bankruptcy tab of my website.
    Answer Applies to: California
    Replied: 1/12/2011
    The Law Office of Mark J. Markus
    The Law Office of Mark J. Markus | Mark Markus
    I don't know what you mean by "regular payments." You don't make payments in Chapter 7 cases, unless you are referring to payments on secured debt obligations such as a mortgage or vehicle loan and obviously you need to continue making payments on those if you want to retain the collateral.

    Whether or not you can keep your car depends on the above, as well as what equity there is in the vehicle, and what exemptions you have available under applicable state law. You need to consult with an attorney regarding the specifics of your situation.
    Answer Applies to: California
    Replied: 1/12/2011
    Maclean Chung Law Firm
    Maclean Chung Law Firm | G. Thomas MacLean Jr.
    Chapter 7 bankruptcy discharges your debt that you owe your creditors, so generally speaking, no, you do not need to make payments. However, if you have a house that you want to stay in, you may need to make payments to prevent it from going into foreclosure. You may be able to keep your car under the various exemptions allowed in a chapter 7 bankruptcy, you should consult an attorney with the specific facts to find out if you qualify for the exemptions.
    Answer Applies to: California
    Replied: 1/12/2011
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