There are some misconceptions about bankruptcy that I hear pretty often.

One of the misconceptions is about automobiles.

People ask me, if I file bankruptcy, can I keep my car. The answer is yes.

However, if you are delinquent in payments, then you will eventually need to get caught up or the lender will pursue the right to repossess your car, even if you have a pending bankruptcy case.

If you are upside down on your car, meaning you owe more than the value of the vehicle, bankruptcy gives you the opportunity to return the vehicle without any further liability for repayment of the auto loan.

But, some people really need their car because they don’t have the money to replace it.

Even if you are upside down on the vehicle, you can continue using it. After your bankruptcy case is concluded, if you run into a problem and can’t make the monthly payments, you can return the vehicle without any liability for the remaining loan balance.

Some auto lenders would like you to sign what’s called a reaffirmation agreement. This agreement makes you responsible for the loan repayment even after bankruptcy.

Some lenders will attempt to force you into signing a reaffirmation agreement if you want to keep the car. That is not true.

You don’t have to sign the agreement, as long as you continue to make the monthly payments and maintain insurance on the vehicle.

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