CLICK FOR A FREE CONSULTATION

OR call us at 602-456-6085 today.

The city of Phoenix and its surroundings are difficult to navigate without a vehicle. Hence, as a Phoenix-based bankruptcy law firm, a common question from our clients is, “Can the bank take my car from me if I file a Chapter 7 bankruptcy?” Although not a substitute for an attorney’s advice geared to your specific situation, this article will provide you with some basic information.

Available Options in Bankruptcy for your Vehicle

First, when an individual files bankruptcy, the bankruptcy code requires that you file a document called a “Debtor’s Statement of Intention”. This document lets every party know what your intentions are regarding your secured debts. There are three options possible. You can surrender the property to your lender and owe them nothing, you can redeem the property, or you can reaffirm the obligation with your bank or finance company. The intention listed on the Statement of Intention must be performed within 30 days of the 341 meeting of creditors.
11 U.S.C. § 521(2)(B). In Arizona, if you do not perform your intentions in a timely manner, the property is removed from the estate 11 U.S.C. § 362(h) and loses its protection from the automatic stay. If your intention is to reaffirm a secured obligation you must attempt to do so within 30 days of the first meeting of creditors. Arizona is in the Ninth Circuit and the Ninth Circuit Court of Appeals has determined that if you do not attempt to reaffirm your obligation with the creditor, your property is no longer protected under the bankruptcy stay. Dumont v. Ford Motor Credit Company, 581 F.3d, 1104 (9th Cir. (Cal.) Sep. 15, 2009).

The Reaffirmation Option

Reaffirming your debt is done by entering into a reaffirmation agreement with your bank or finance company. A reaffirmation agreement usually requires you to continue making payments as if no bankruptcy had been filed and you get to keep your property.

A reaffirmation agreement must state whether the agreement will create an undue hardship on you or your dependents. If your lender is a Credit Union, it won’t matter if it creates an undue hardship or not. Credit Unions have an exemption from the undue hardship clause in the Bankruptcy Code. If the presumption of undue hardship arises, your Bankruptcy Judge may set a hearing to consider the approval of the reaffirmation agreement.

What happens if the judge denies your reaffirmation agreement? In Arizona, the judge may deny your reaffirmation agreement and enter an order prohibiting your finance company from repossessing your property as long as you continue to make the payments. You might ask if that would be the same as approving the reaffirmation agreement. The answer is definitely no. If your reaffirmation agreement is approved by the court that means that you are on the hook for the entire contract. That means that if something unfortunate occurs after the bankruptcy and your property gets repossessed, the bank or finance company will sell the property and they will be able to sue you for the difference between what you owe and what it sells for. If you find yourself not being able to make the payments after the judge denies the reaffirmation agreement and the property is repossessed, then you will owe nothing further than the property. This is commonly referred to as a ride-through.

So, whether or not you get to keep your personal property will depend on you. If you want to continue to make the payments on it and are willing to enter a reaffirmation agreement then the answer is, yes, you can keep your property. If you choose to discharge the debt instead, you can surrender the property and be done with it. If you think that a reaffirmation agreement would benefit you, please be sure to discuss it with your Arizona bankruptcy attorney.

Contact Us for a Free Consultation

If you are located in Phoenix, Scottsdale, or Tempe, contact the
Contact Wright Law Offices online or call 480-845-0145 to set up a free consultation. This article is not meant to be a substitute for legal advice from an attorney as every person’s situation is unique. It is important that you hire an attorney to help you avoid the many pitfalls that can occur in a bankruptcy.

Read more about our bankruptcy services…

Ways we can help…

Receive a FREE Consultation
Bankruptcy Attorney Clients

Receive a FREE Consultation

Use the form below or call us at 866-703-3287 today. We’re here to help.

Our Locations

  • Phoenix Office – New
    Wright Law Offices 
    2999 N. 44th St., Ste 600
    Phoenix AZ 85018 

    Telephone: 602-456-6085 / 866-703-3287
    Phoenix Law Office
  • Phoenix Office – Old
    Wright Law Offices 
    668 N. 44th St., Ste 320
    Phoenix AZ 85008 

    Telephone: 602-456-6085 / 866-703-3287
    Phoenix Law Office
  • Scottsdale Office 
    Wright Law Offices 
    7135 East Camelback Road, Ste 230
    Scottsdale AZ 85251 

    Telephone: 480-845-0145 / 866-703-3287
    Scottsdale Law Office

  • Tempe Office 
    Wright Law Offices 
    2238 S. McClintock Dr.
    Tempe AZ 85258 

    Telephone: 480-845-0145 / 866-703-3287
    Tempe Law Office

  • Avondale Office
    Wright Law Offices 
    12725 W Indian School Rd, Suite E-101
    Avondale AZ 85392 

    Telephone: 623-258-4480 / 866-703-3287
    Avondale Law Office

  • Mesa Office
    Wright Law Offices 

    4856 E. Baseline Rd.
    Suite #104
    Mesa, AZ 85206
    Telephone: 480-845-0145 / 866-703-3287
    Mesa Law Office

  • Glendale Office 
    Wright Law Offices 
    20325 N. 51st Ave., Suite 134
    Glendale, AZ 85308
    Telephone: 623-258-4480 / 866-703-3287
    Glendale Law Office

What our clients are saying…

TOP Rated PHOENIX BANKRUPTCY ATTORNEY

Mr. Wright and his staff were amazing. They made a negative situation a lot better and turned it into a positive. Could really tell they care helping people and I will refer their Phoenix Bankruptcy Attorney firm to friends and family. Thanks again.

Tara
TOP Rated PHOENIX BANKRUPTCY ATTORNEY

I called around looking for the right bankruptcy lawyer and came across Benjamin Wright. He personally called me for the consultation seeing how I live in Kingman AZ. He was very helpful from the start and his staff was very friendly and explained any questions I had, sorry for all the questions. I would definitely recommend Wright law offices, and I do!! Thanks for everything, you made what seemed like a hard thing to do simple!! You guys rock!!!

Steffanie
TOP Rated PHOENIX BANKRUPTCY ATTORNEY

Great lawyer, he really helped my mother out of a jam. She was totally new to bankruptcy and he talked with us for about an hour and a half to make sure she wouldn’t be worried.

Damian
TOP Rated PHOENIX BANKRUPTCY ATTORNEY

Ben is a kind and down to earth attorney. He worked around my busy schedule as a single mom (school, full-time job, and daycare pick up and drop off times). He explained absolutely everything to me and was good about e-mailing. I am writing this review as a THANK YOU.

Shannon
TOP Rated PHOENIX BANKRUPTCY ATTORNEY

I had a very positive experience with Attorney Wright. He or his staff returned my e-mails and calls promptly (even after business hours occasionally). His fees were reasonable. He was patient with me when I showed up in court missing an important document. He is aggressive, but fair and nice.

Jenna