| Car loans and car leases are secured debts until your car has been repossessed. A secured debt is one where the property is pledged as collateral for repayment of the loan or payment of the lease. If you don’t pay the loan or lease, the finance company is entitled to take back the vehicle. However, once you give up possession of your car, any remaining debt on the car loan or car lease is 100% dischargeable in a chapter 7 bankruptcy case as an unsecured debt. You will be able to keep your car if you agree to legally honor the car loan or car lease after the bankruptcy and you remain current on your payments. Your bankruptcy attorney will prepare and file with the court the special documents you need to keep your car in a bankruptcy.
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