Will we lose our car in a chapter 7 bankruptcy? 14 Answers as of May 17, 2011

My father and mother in law are filling chapter 7 bankruptcy. When we got our car my mother in law signed as the primary owner, my husband is the cosigner. We have been the ones making every payment. Can the car be taken away from us even though we have been the ones paying for it? Is there something we could do to be able to keep our car? Can this affect my husbands credit in any way?

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Law Offices of Michael J. Berger
Law Offices of Michael J. Berger | Michael J. Berger
Your mother and father in law will have to decide if they are willing to reaffirm the debt to the car lender. If they are willing to do so, and if there is not more equity in the car than any available exemption, you will be able to keep the car. If they want to get out from the obligation to pay the car loan, they may reject the loan and the lender may then seek to repossess the car.
Answer Applies to: California
Replied: 5/17/2011
Indianapolis Bankruptcy Law Office of Eric C. Lewis
Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
As long as you continue to make the timely payments, it won't affect you keeping the vehicle in that regard. Also, it won't affect your husband's credit. The one thing to be clear about is whether any equity exists in the vehicle with regard to it potentially being unprotected and subject to liquidation - but this is something that is subject to the applicable exemptions available to the person filing bankruptcy.
Answer Applies to: Indiana
Replied: 5/3/2011
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
You get to keep the car as long as you make the payments. The bankruptcy just relieves her of any liability for it. This should not affect his credit, if it does he will need to file a dispute with the credit reporting agencies.
Answer Applies to: California
Replied: 5/3/2011
Steven D. Keist, Attorney at Law
Steven D. Keist, Attorney at Law | Steven D. Keist
This is a secured obligation. You will not lose the care if you are making payments. Your mother in law should indicate in her filing that she wishes to reaffirm on the debt even though she is not making payments. There may be a concern if there is too much equity in the vehicle.
Answer Applies to: Arizona
Replied: 5/3/2011
Law Office of Harry L Styron
Law Office of Harry L Styron | Harry L Styron
There is provision in the Statement of Affairs for a petitioner to designate property which is not their own, but which they are holding for someone else. The car should be noted in that provision, and should be no problem if it is. However, it is possible that the trustee may not accept that designation, but may require proof of who made the payments, so you should be prepared for that. If it goes any further than just showing the trustee the proof of payment you ought to consult a bankruptcy attorney. Also, if the petition has been filed without the designation, you will need an attorney to deal with the issue in the bankruptcy court.
Answer Applies to: California
Replied: 5/3/2011
    Uriarte & Wood, Attorneys at Law
    Uriarte & Wood, Attorneys at Law | Robert G. Uriarte
    You may keep the car as long as the payments are made. Only the cosigner's liability is affected. Be prepared to prove that all payments have actually been made by you and not the debtors.
    Answer Applies to: California
    Replied: 5/3/2011
    Greifendorff Law Offices, PC
    Greifendorff Law Offices, PC | Christine Wilton
    No, you'll not likely lose the car and when mother-in-law enters bankruptcy, she can reject your loan agreement and that debt will be discharged as to her liability. This means that your husband will remain the sole debtor and must continue to make all payments in order to clear the lien.
    Answer Applies to: California
    Replied: 5/3/2011
    Carballo Law Offices
    Carballo Law Offices | Tony E. Carballo
    I doubt very much you will lose the car so long as you keep the payments current. I would not worry too much about that unless it is a very expensive car in which your husband has a lot of equity. You should be able to ask your inlaws' attorney to explain it to you so you will not be worried. The car needs to be disclosed by your inlaws in their schedule B and the loan on schedule D. However, it must be disclosed that the true owner is your husband (equitable owner) and that he is a co-owner. Your husband must be disclosed also as a co-debtor on the car loan. Your husband's credit report will show that the car loan is involved in a bankruptcy case since that is true. However, that should have no effect on his credit rating. Unfortunately, the word bankruptcy being mentioned in his credit report may be misunderstood and he may be denied credit by the less sophisticated lenders and others using credit reports without fully understanding them, such as landlords. I am sure someone will think that your husband filed for bankruptcy since the report will mention that the loan is involved in a bankruptcy case. Any chance of your husband getting a new used car loan and paying off the existing loan before the bankruptcy?
    Answer Applies to: California
    Replied: 5/3/2011
    The Law Office of Mark J. Markus
    The Law Office of Mark J. Markus | Mark Markus
    Who is on the loan is irrelevant. The issue is whose name the title is in. If it is in your father and/or mother-in-law's name, then the vehicle is property of their bankruptcy estate. The Trustee can sell the vehicle unless they have taken an exemption to protect the equity in the vehicle. Exemption laws are based on the state where you resided for the 2 years prior to filing your bankruptcy case or, if you lived in more than 1 state during that period, in the state where you resided for the greater part of the 180 days prior to that 2 year period.
    Answer Applies to: California
    Replied: 5/2/2011
    The Schreiber Law Firm
    The Schreiber Law Firm | Jeffrey D. Schreiber
    It depends on which bankruptcy court district where their case is filed. In many districts, the fact the bankruptcy debtors have not been making the payments will allow the vehicle to be retained. In all events, they would have to reaffirm the debt (remain legally responsible for the payments), otherwise the creditor can repossess the vehicle after the bankruptcy case is closed. If the vehicle is repossessed, as a co-borrower, it could be reflected on his credit. His best protection is to refinance the vehicle in his name.
    Answer Applies to: California
    Replied: 5/2/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    Proving that you have made all the payments should help you establish real ownership. If the car is not paid for your husband's credit will be affected and he can be sued by the lender. It depends on how the bankruptcy schedule B describes this asset. Also, it depends on how the exemption is claimed in Schedule C. Your parents' bankruptcy attorney should be able to explain those things to you.
    Answer Applies to: California
    Replied: 5/2/2011
    Diefer Law Group, P.C.
    Diefer Law Group, P.C. | Abel Fernandez
    If you keep making your payments, you won't lose the car.
    Answer Applies to: California
    Replied: 5/2/2011
    Law Office of L. Paul Zahn
    Law Office of L. Paul Zahn | Paul Zahn
    The car is subject to the bankruptcy court (assuming it was listed as a debt). It will not effect your husband's credit and, provided you continue to make the payments, they probably won't ask to repossess the car. Your mother in law can reaffirm the debt if she wants to, but I don't recommend doing that.
    Answer Applies to: California
    Replied: 5/2/2011
    Bankruptcy Law Office of Robert Weed
    Bankruptcy Law Office of Robert Weed | Robert Weed
    I cannot legally affect your husband's credit as long as he keeps making the payments. It used to be very common for one signers bankruptcy to leak over on to the co-signer, but the credit bureaus changes their system about ten years ago the new system is called Metro 2so that it doesn't happen any more. Can you lose it probably not. Almost certainly not, but it depends on what it's worth. Is it a 2009 Corvette with only two payments left? Then the bankruptcy court would probably fight you for it. Do you owe about what it's worth? Then they are not going to bother.
    Answer Applies to: Virginia
    Replied: 5/2/2011
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