Tow TruckDid you know that you can easily surrender your car in a Chapter 7 bankruptcy? You can escape high loan payments, punishing interest, and avoid lawsuits.

If you lease or finance a car and attempt to surrender the car outside of bankruptcy, your lender will likely charge you all sorts of fees. Many times, a lender will sue a borrower for the “deficiency balance” of the loan.

A deficiency balance is the amount of money you still owe the lender even after surrendering the car. Deficiency balances can easily be many thousands of dollars after the dust has settled. It doesn’t matter if you voluntarily surrender your car or whether it is repossessed — often time there is a debt owed.

Surrendering a car during the bankruptcy process is completely different. At the outset of your case, we notify the Bankruptcy Court and your lender that you intend to surrender your vehicle.

After your case is started, your lender may attempt to talk you out of surrendering your car. They would prefer that you keep the car and continue making payments. However, the decision is 100% yours to make.

Some lenders may wait until after your bankruptcy case is over to retake possession of your car. Others are more aggressive and will seek the return of the car before your bankruptcy is over.

Once you make the decision to surrender your car in the bankruptcy, it is best that you start making alternative transportation arrangements. Most lenders will communicate with my office or my clients directly to set up a day and time to voluntarily surrender the car. Others, like Wells Fargo, are very inconsistent and have mislead my clients in the past. Therefore, once the surrender date approaches, it is wise to remove all of your possessions from the car just in case it is taken without your knowledge.

If you are not sure what you want to do with your car, the safest bet is to indicate that you want to keep the car and continue making payments. You have until the end of your bankruptcy case to change your mind. In fact, this is fairly common.

Please call my office at (916) 333-2222 if you have any questions about surrendering your car in a Chapter 7 Bankruptcy in Sacramento.