Yes! The answer is yes for most people. Under Michigan bankruptcy law you can keep up to $3250 equity in your car, more if you are married and filing jointly. As long as you keep current on your car payments and the equity in your car is $3250 or less, you may keep the vehicle if you reaffirm the debt.
Here’s an example. Let’s say I own a 2007 Ford Focus worth $5000 but I still owe the bank $2500. To determine my equity, I subtract the $2500 I owe from the $5000 value of the car leaving me $2500 in equity. As long as I continue to make my car payment and reaffirm my car loan with the bank, I can keep the car. If I don’t keep up on my payments, the bank could repossess the car so its important I keep making those payments.
Very few people own their cars outright, most have a car loan. To determine the equity you own in your car, get a value of your car through Kelly’s Blue Book and subtract the total amount you owe the bank from the value. The remaining balance is your equity. If you own less than $3250 in equity, you can keep the car even if you file Chapter 7 bankruptcy.
One of the many questions we can help you with, we invite you to contact us today. For a free consultation about your bankruptcy issues, contact Church and Korhonen PC today at 1.800.758.5611.