Can I Keep My Car If I File Bankruptcy In Iowa – Part 2
In Part 1 of Can I Keep My Car If I File Bankruptcy In Iowa we looked at five questions that must be answered each time we are looking at saving a car in bankruptcy. If you haven’t already read the previous post, you should take a moment and read it. Just to review, the five (5) questions are:
- How Many Cars Do You Own? (Really, read the other blog post. You may be surprised how many cars you “own.”)
- What are the Year, Make, Model, and Condition of Each of Your Vehicles?
- How Much Is Each Vehicle Worth?
- Are There Any Loans Against The Vehicles?
- Is There Equity in The Car?
In order to decide if you get to keep your car when you file for bankruptcy we apply one final test. That test is the:
15 U.S.C. § 1692g – Your right to dispute and request verification of a debt
If you have defaulted on a debt owed to the original creditor several things may occur. The original creditor (for example: Capital One, HSBC, GE Money, Mercy Hospital, etc.) may do one of the following:
- Close the account; charge off the debt and issue you a 1099-C tax form (forgiveness of debt). It ends there. You pay tax on the debt forgiven as income;
- Close the account and immediately send the debt to a “legitimate” law firm to file a collection lawsuit;
- Close the account; charge off the debt and sell the debt to a collection agency for collection;
- Assign the defaulted debt to a collection agency for collection. Although it is assigned as opposed to sold, the collection agency is a separate entity from the original creditor.
- You may also be facing a situation where the debt has been sold or assigned several times to several different collection agencies.
There is one major ground rule to remember here:
Countdown of the top Five Reasons People In Iowa File Bankruptcy
5. Unexpected Expenses. Most unexpected expenses come from a loss of property due to theft or natural disasters. Here we could be dealing with such things as floods, earthquakes, tornadoes, and other natural tragedies. Most people have some type of insurance coverage over their property, but not enough or at least not the right kind. Many homeowners are likely unaware that they must take out separate coverage for certain events such as earthquakes. Homeowners who do not have coverage specific to the event then they do not only face losing their homes, but most or all of their possessions as well.