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Property related to bankruptcy

Downey, CA |

My mother is considering filing for bankruptcy. She has all unsecured debt (credit cards and payday loans). She just recently bought a vehicle that i am helping her pay for. The car was old, the maintenance was killing her finances and she didnt have the money to keep this old car going. I am picking up the excess so that her payment for this car isnt any more than the old one. She has no other property. Will this hurt a chapter 7 filing? She doesnt want to include it, she didnt get the car just to not have to pay for it.

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As long as she keeps making the payments, the car loan will "ride through" the Ch 7 process.

Good luck to her. I guess I would not feel lawyerly unless I wrote a disclaimer to this answer - after all, that is what we lawyers are trained to do. So here it is. Disclaimer: Trying to provide a complete answer to a brief question without meeting the questioner and without getting all the facts is much like internet dating. Despite what you have been told by the person you have met online (and they tend to always put everything in the best light for themselves), once you meet them face to face you realize how much has been left out. People tend to bend the facts and there is always the other side to the story. So, this answer is about as valuable as the price that was paid for it. It should not be considered legal advice. It is meant as a general overview of how the law could apply to a very broad set of facts that may not have any applicability to the actual circumstances of the person making the question. It is hoped to provide some understanding of the broad field of law that could come into play. No attorney-client relationship has been formed with the questioner and no attorney client relationship was ever anticipated by my response to this question. I would also like to remind you that I am only licensed in the State of California, and the answer provided is based upon my knowledge of California law.


You mother should be okay to file for a Chapter 7 Bankruptcy. However, she MUST list the new vehicle. She would indicate on the BK paperwork whether or not she wishes to keep the vehicle.
She has the right to either surrender the vehicle OR keep the vehicle and reaffirm the debt.

If she opted to keep the vehicle, the financing company would send her BK attorneys paperwork related to the reaffirmation of the debt. She would then fill this paperwork out and submit it back to the vehicle financing company and they would file it with the court. As long as she is current on her payments (and stays current) AND she can demonstrate to the Trustee and the BK court that she can afford to pay for the vehicle, she should be allowed to keep the vehicle. The rest of the BK should proceed smoothly (being as she has primarily unsecured debt).

Best of luck to you.


The car will be included in the bankruptcy. I am assuming the car has litte or no equity. Your mother can keep the car so long as she reaffirms the car loan. This is done by way of an agreement with the lender. Most lenders are willing to cooprate with a reaffirmation.


Depends on the equity value of the car and CA exemptions (protections) whether or not the trustee will take the car. Probably not. Also, with or without a BK, as long as the payments are being made, she can keep the car. But, DON'T let her sign a reaffirmation agreement. Good luck.

Be sure to designate "best answer." If you live in Oregon, you may call me for more detailed advice, 503-650-9662. Please be aware that each answer on this website is based upon the facts, or lack thereof, provided in the question. To be sure you get complete and comprehensive answers, based upon the totality of your situation, contact a local attorney who specializes in the area of law that involves your legal problem. Diane L. Gruber has been practicing law in Oregon for 26 years, specializing in family law, bankruptcy, estate planning and probate. Note: Diane L. Gruber does not represent you until a written fee agreement has been signed by you and Diane L. Gruber, and the fee listed in the agreement has been paid.


Bankruptcy is an all or nothing proposition. You have to list everything you own and everyone you owe money to. You cannot pick and choose. The car should be listed on Sch B and the debt associated with the car on Sch D and if it has equity exempt it on Sch C, also list your intent with regards to whether you want to surrender, redeem, or reaffirm the car.


No problem here with the recently purchased car, as far as your description of facts reveal.

Probably wise to seek help of an experienced attorney in at least preparing her bankruptcy case, if not also continuing on to represent her in talks with the auto lender and possible reaffirmation agreement.

Best of luck!

Michael Salanick, Esq.

NOTE: we can be reached at (310) 590-4575. This answer is made available by the lawyer for educational purposes only. By using or participating in this site you understand that there is no attorney client privilege between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed professional attorney with whom you have established an attorney client relationship. The law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question.

Michael Salanick

Michael Salanick


Do you want to know where to "list" all of this information in the bankruptcy schedules? What amounts to include? What amounts to exempt? What to say if/when negotiating a reaffirmation agreement (or what not to say)? OR...Do you want to find help from someone that already knows how to handle? FYI...Self-help bankruptcy resources are available across LA and Orange County if your mother won't be able to afford the fees for legal services of a bankruptcy attorney.