Expert: Mark J. Markus- California Bankruptcy Attorney - 6/1/2009

Question
QUESTION: My husband and I are thinking of filing bankruptcy (Chapter 7) for a couple of high interest credit cards, a medical bill and, here is where my question lies. We have a loan and there is an automobile listed as collateral. We don't want to lose this as it's been in the family a long time (no money) is owed on it though. Can we include this debt in our bankruptcy and not lose the collateral or will they seize it?

ANSWER: I don't understand the question.  If there's no money owed/debt on the vehicle, what is the vehicle collateral for?

---------- FOLLOW-UP ----------

QUESTION: We took out a loan for debt consolidation and property improvements and a vehicle (which was used as collateral). That particular vehicle we sold and obtained this one (it's an antique car but no money is owing on the car itself. However since we still owed on the loan, they made us put this up for collateral.

Answer
Your facts are still a bit unclear.  If this creditor has a valid perfected security interest in your vehicle, then you have to maintain the payments on them pursuant to your promissory note/contract with them, or they can repossess the vehicle.   You may additionally have to do a reaffirmation agreement with them in the bankruptcy case in order to prevent them from repossessing after your case is over.