Many times vehicles can be protected in bankrutpcy. In Chapter 7 bankruptcy, if you're still paying on the vehicle, you can choose to reaffirm the debt and continue to make payments on the vehicle. If the vehicle is upside down and you want to get out from under the vehicle debt, you can include the debt in the bankruptcy.

If the vehicle is paid off, it still may be protected. The Arizona property exemptions allow an invidual filer to exempt up to $5,000 in equity in a vehicle. Married couples that file can protect up to $10,000 in the equity in one vehicle, or $5,000 in the value of two separate vehicles.

In Chapter 13 bankruptcy, you have may the option to cram down the amount owed on the vehicle. The cram down can be used to reduce the amount owed on the vehicle to the fair market value. The amount that is crammed down than becomes an unsecured debt and can potentially be paid at a small percentage of what is owed. Contact us for further information on how vehicles are handled under the bankruptcy code.