722 Vehicle Redemption | Miller & Miller Law, LLC | Wisconsin

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Home 9 Programs 9 722 Vehicle Redemption

What Are Your Options In Bankruptcy With Respect To Your Vehicle?


When you file bankruptcy, you have THREE options.

  1. Reaffirmation Agreement
    When you reaffirm a debt, you agree that you will still owe the debt after your bankruptcy case is over. This results in you staying with your current lender.

    If you owe $25,000 on your car before you file for Chapter 7 bankruptcy, you most likely will continue to owe $25,000 on your car after you file for bankruptcy.

  2. Redeem Your Vehicle
    In a Chapter 7 bankruptcy, you can keep your vehicle and pay only what it is worth, NOT what you owe. All the negative equity would be discharged within the bankruptcy.

    For example:
    Say you have a 2015 Chevrolet Malibu LS with 26,850 miles. First, we need to find out the value of the vehicle. Let’s say it is valued at $11,700. This is the amount of money your current lender would receive if you were to redeem your vehicle. As you can see below, there can be a savings if you are upside down in your auto loan (paying more than what it’s worth).

    $489.00/month at 64 months = $31,296.00
    $359.53/month at 60 months = $21.571.80


  3. Replace Your Vehicle
    In Chapter 7 or 13, you are able to replace your vehicle. If this is done during an active bankruptcy, you will be able to get another car before surrendering your current one.

    This is ideal for someone with high mileage, constant engine trouble, or simply…when a redemption and reaffirmation just doesn’t work!