If you have any secured debts or unexpired leases, you have to file Official Form 108, the Statement of Intentions for Individuals Filing Under Chapter 7 (or Statement of Intentions) with the bankruptcy court. The most common types of secured debt are vehicle loans and mortgages. If you’re planning on filing a Chapter 7 and have a car loan, here are 6 things you should know about the Statement of Intentions.
(1) It lets the bank know what you want to do with the property securing the loan
In a Chapter 7 bankruptcy, you’ll be able to choose between surrendering the car and keeping it. To keep it, you’ll have to either redeem it by paying its current fair market value, or agree to reaffirm the debt it secures. Note, if you’re not current with your payments when your case is filed, you may not be able to keep the car without doing a redemption. Banks are generally unwilling to offer a reaffirmation for delinquent car loans.
The Statement of Intentions tells the bank which option you choose. That’s why in addition to submitting it to the court, you also have to send a copy to each creditor listed on the Statement of Intentions.
(2) It’s best to file the Statement of Intentions with your petition, but you don’t have to
The Statement of Intentions has to be filed with the court within 30 days from the date the case was filed. If the 341 meeting is scheduled to take place less than 30 days from the filing date, it has to be submitted to the court on or before the date of the 341 meeting. To avoid missing this deadline later, you should plan to file your Statement of Intentions when you file your bankruptcy petition. There’s no harm in filing it then, even if you think you may change your mind.
(3) Yes, you can change your mind!
If you change your mind about keeping your car, you can amend your Statement of Intentions following these simple steps. Once done, make sure you send a copy to the creditor, so they know about the change.
(4) You don’t have to send the Statement of Intentions to all of your creditors
There are some documents that have to be mailed to every single creditor listed on your creditor matrix once they’re filed with the bankruptcy court. That is not the case for the Statement of Intentions. You only have to send a copy to the creditor(s) listed on the Statement of Intentions.
(5) The automatic stay protects you even if you plan to surrender your car
The automatic stay prohibits creditors from taking any action to collect a debt. That includes repossessing a car. This is true even if you’ve indicated on your Statement of Intentions that you plan to surrender the car. If you wish to turn in the vehicle voluntarily, you can do so, but the bank can’t actually move forward with a repossession until the automatic stay has been terminated.
The bank can file a motion asking the court to terminate the stay to allow them to move forward with a repossession. Alternatively, they can wait for the stay to terminate when your discharge is entered.
(6) If your listed intent is to reaffirm or redeem, you have to follow through within 45 days
If you don’t either sign a reaffirmation agreement or file a motion to redeem within 45 days from the date set for your 341 meeting, the automatic stay expires automatically. This means the bank can repossess the car without violating the automatic stay even though you planned on doing either a reaffirmation or a redemption.
If you’re reaffirming, the bank will send you a reaffirmation agreement. You’ll have to fill it out and send it back to them before this deadline expires. If you’re redeeming your car, you’re the one that will have to file a motion to redeem with the court before this deadline. If you miss the deadline, the bank can repossess your car at any time, without first asking the bankruptcy court for permission.