Expert: Terry Leeders - 8/16/2008

Question
We recently filed for Chapter 7 bankruptcy here in TX.  We DID NOT included my husbands truck, although we should have.  At the time We were unclear of how we could arrange/qualify to get another vehicle after filing for bankruptcy, as we need a lower monthly auto payment.
 Since we've filed - we've received NUMEROUS offers from local dealers who know about the bankruptcy.  So apparently there is life IMMEDIATELY afterwards.  The Chapter 7 bankruptcy has very recently been finalized.  Although We are currently "upside down" in our truck, we MUST sell it or trade it in.

Question . . . can we voluntarily turn in our truck to the credit union and walk away.  I assume they consider that a repossession.  Is auto repossession optional immediately after bankruptcy?  Is it a less mark on your credit record than a bankruptcy or just as bad?  Will it even further damage our credit -- making it even severly worse to establish credit in the future?  Please clarify!!!!!  As you can imagine, this bankruptcy (had our own business and it failed) has been devastating for us and we are trying very hard to overcome.  We MUST have a lower auto payment.
Is repossesion an option?
THANKS SO MUCH FOR YOUR OPINION/ADVICE!!!

Answer
If you did not list the debt in bankruptcy, it will not be discharged.  Normally, debtors choose to reaffirm a vehicle by signing a reaffirmation agreement, agreeing to keep the debt after bankruptcy.  If you signed one, or if you didn't put the debt in bankruptcy at all, then you are on the hook for any balance after you surrendered it.  If you listed the debt in the case, and did NOT sign a reaffirmation agreement, then yes, you can surrender and walk away from the debt, discharging the entire balance.  Check with your lawyer as to what occurred in your case to be certain before you take any further steps.