In 2005, Congress amended the Bankruptcy Code in favor of the car finance
industry. In short, the change meant debtors couldn’t file for bankruptcy
and continue making their car payments with complete certainty their automobile
wouldn’t be repossessed.
After the amendment in 2005, filers were essentially forced to choose between
keeping their cars and or discharging their debt.
Now, the California Assembly is looking to help debtors through Senate
Bill 308. If SB 308 becomes law, debtors won’t have to worry about
securing a reaffirmation agreement in order to keep their cars.
SB 308 would disallow lenders from declaring an auto loan defaulted just
because the debtor filed for bankruptcy. This would let the filer continue
making payments if he / she desired without sacrificing the bankruptcy
Additional Changes by Proposed by SB 308
- Increasing the exemption value of an automobile to $6,000
- Spouses no longer need permission to use California exemptions
- Protecting family support / spousal support
- $5,000 exemption for sole proprietors’ cash and inventory
SB 308 already passed the California Senate and the bill’s first
test is expected later this month.
Need an attorney? Contact our law firm today.
SB 308 is a step in the right direction for bankruptcy filers. If it becomes
law, individuals seeking debt relief through bankruptcy will no longer
have to choose between relief from their debts and retaining their cars.
If you’re facing overwhelming debt, a Sherman Oaks bankruptcy attorney
from Wadhwani & Shanfeld can provide the guidance you need to make
the right financial decision for your family and your future. We provide
representation in a wide variety of bankruptcy and debt relief matters,
so schedule your free initial consultation with us today.