One of the most common questions asked during and after Chapter 7 bankruptcy is: “What happens to my car?”  
Chapter 7 Documents
During a Chapter 7 bankruptcy, if you have a car that is financed, there are three typical scenarios  
 
(1) Reaffirmation. With this option, you agree to remain responsible for the debt and continue to make payments on the car loan. Reaffirmation requires the filing of a reaffirmation agreement with the Bankruptcy Court.  Reaffirmation is subject to review by the bankruptcy judge who determines whether or not the reaffirmation is reasonable and, in the debtor’s, best interest.  A debtor can cancel(rescind) the reaffirmation agreement at any time before discharge, or 60 days after the filing of the reaffirmation agreement, whichever is later.  
 
(2) Surrender. When a debtor informs a creditor that it is surrendering a vehicle, the debtor is agreeing to allow the creditor to repossess the vehicle.  Often this is done at an agreed time and place. However, unlike a repossession outside of bankruptcy, the creditor is not allowed to seek any additional money such as a deficiency judgement against the debtor.  

(3) Redemption. With this option, you will argue the value of the vehicle. It usually involves what is owed.  The balance must be paid within in 30 days. Most people will not have this type of cash on hand. This option is rarely used.  
 
If you have any questions regarding your options for bankruptcy, please don’t hesitate to reach out for a free consultation.