If my car was sold at an auction four months ago, can the debt be eliminated?

Under Chapter 7 bankruptcy law, you have the ability to eliminate the debt on a vehicle whether or not you still possess it or whether or not it’s been repossessed or sold at an auction as long as you make the indication in your Chapter 7 bankruptcy petition that you no longer wish to retain the vehicle.  Under Chapter 7 law, whatever amount is owed under that vehicle will be eliminated.    In a typical scenario, the finance company repossessed is the vehicle, puts it on auction and comes after an individual for the deficiency.  The deficiency is the amount that owed after the auction proceeds are paid toward the debt.
In a Chapter 7 bankruptcy, there is no amount owed after the case is filed if the debtor is going to be surrendering the vehicle.  In a Chapter 13, an auto deficiency can be repaid over a period of months based on whatever dollar amount is available pursuant to the budget.  In many cases, that amount is $.10 on the dollar, often $.25 on the dollar, up to approximately $.50 on the dollar in most cases.  We see very few cases where we have 100% payment plan on unsecured debt.
The key to the car situation is to determine whether or not you wish to keep it or not.  If you wish to keep it, you can reaffirm the debt under Chapter 7 or repay the debt under Chapter 13.  If you don’t wish to keep the vehicle, you can eliminate the entire debt 100% under Chapter 7.  You don’t have to worry about the attorneys’ fees, the repossession fees or the deficiency.  The entire debt under Chapter 7 bankruptcy law will be eliminated on a repossessed vehicle if you no longer wish to retain ownership in the vehicle.  Make sure that your attorney knows of your intentions so they can be properly listed on your bankruptcy petition.