Q: CAN I KEEP MY CAR IF IT HAS A LIENHOLDER? I WANT TO KEEP THE CAR BUT GET RID OF THE LOAN WITH THE LIENHOLDER.

A: If your car has a lien due to a loan where the vehicle was used as collateral, you generally can keep the car as long as you continue to make payments on the loan. When considering bankruptcy, whether Chapter 7 or Chapter 13, the specifics of your situation will largely determine if you can keep your vehicle. In a Chapter 7 bankruptcy, if the car's equity falls under your state's exemption limit and you can keep up with payments, you might be able to reaffirm the debt and retain the car. However, this does mean you agree to continue the loan payments under the original terms.

In a Chapter 13 bankruptcy, you may reorganize your debts and possibly reduce the amount owed on the car loan if you meet certain criteria, like owing more than the car is worth and having the loan for a certain period. This process, known as a cramdown, can lower your payments and allow you to pay off the vehicle through your repayment plan. But remember, you need to maintain payments according to the plan to keep the car.

It's important to evaluate your options carefully and understand the implications of bankruptcy on secured debts like a car loan. Consulting with a bankruptcy attorney could provide clarity tailored to your circumstances. They can guide you through the process and help determine the best course of action based on your specific situation and the laws in your state.

A: When you use the car as security the lender ends up with an ownership interest in the car. If you file bankruptcy you can normally still pay the loan and keep the auto. There are no free cars or homes in bankruptcy. The only exception I know of is occassionally the lender forgets to file the lien or mortgage. But then the Trustee owns the home or car if you file bankruptcy. He is the same as a creditor who has sued you at the time of your filing and attached your property. Exemptions allow you to keep some equity. The exemption for a car in Kentucky is 4500 dollars. So if the auto is worth less than 4500 or has less than 4500 in equity you would keep the auto even if there was no lien. The short answer is you generally dont get to keep the auto unless you pay the secured creditor. If you owe more than the book value for the auto you can look at redeeming the auto from the lender by paying the book value and keeping the auto.