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Vehicular exemptions during Texas bankruptcy

Many people may have questions about what kinds of property they can keep when declaring bankruptcy in Texas. Depending on what type of bankruptcy someone files, certain assets may be exempt from collection activity.

For example, vehicles that are still being financed but have current balances may be excluded from repossession. Chapter 13 bankruptcy filings generally permit between 3 and 5 years to pay off outstanding debts. A Chapter 7 filing creates an automatic stay, which is period that freezes debt collection activity unless the court allows it.

However, individuals with car payments that are not current may be subject to losing a vehicle if the court gives the lender permission to repossess the property, but any person that has declared bankruptcy may be able to retain possession of the vehicle. If an individual relies on the car for employment that would help eliminate debt, the court may permit the filer to keep the vehicle. In such cases, that person would need to modify the original loan terms and work with the lender toward finding another solution. It may be possible for an individual to purchase the car at fair market value.

Bankruptcy law can be complicated, and understanding exemptions and other specifics about the process can be difficult without professional help. An attorney may be able to provide advice and insight into the process. For example, the attorney may be able to help a person filing for bankruptcy retain assets that are necessary for their continued financial security after the debts are discharged or reorganized.

Source: FOX Business, "Can Lender Repossess My Car in Bankruptcy?", Tara Baukus Mello, December 17, 2014

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