A bankruptcy discharge is an injunction that immediately stops and further prevents creditors from collecting debt from a debtor. It is part of the relief a debtor can receive through bankruptcy. To prevent the repossession and/or sale of property, such as a car, debtors will often reaffirm the debt of property that they want to keep. This means that while the debtor is releasing himself from liability from other debts, and giving up the property in the process, he is accepting liability for any property he wants to continue paying by not subjecting it to bankruptcy.
Reaffirm the debt for your vehicle. This essentially means you are re-agreeing to the terms of the initial loan, similar to how one would renew their wedding vows, and removing it from discharge. Reaffirmation of debt is done between the debtor and the creditor, and a summary of reaffirmation agreement, with motion for approval of reaffirmation, must be filed with the court handling your bankruptcy matter.
Determine if your vehicle is worth selling. If the loan on your vehicle is still fairly new, chances are, the debt is still upside-down. This means that you owe more on the loan than the vehicle is worth. For example, if you owe $20,000 on a loan for a vehicle that is worth $15,000, you are upside-down on the loan. Selling your vehicle in this instance would not be beneficial, as you would still owe at least an additional $5,000 on the loan if you managed to sell the vehicle for face value. If you are under your loan (owing less than the vehicle's value), then it would be beneficial to you to sell the vehicle. If you are even (owing exactly what the vehicle is worth), then you may consider selling the vehicle to pay off the debt and end your liability for the loan without having a discharge on the loan listed on your credit history.
Seek permission from the judge in your bankruptcy case by submitting a request for approval, along with your plan for selling your vehicle and your reason(s) for doing so. A good reason to sell a vehicle after discharge in bankruptcy is to make good on the initial agreement you had with the creditor by taking responsibility where you can instead of trying to discharge the debt. Selling the vehicle without notifying the judge can result in your bankruptcy proceedings being halted, or the judge may even revoke your bankruptcy entirely, leaving you liable for every outstanding debt you owe once more. Judges do not like to see debtors making these kinds of decisions without first seeking permission, as some debtors will attempt to defraud their creditors and the judge for their own benefit after securing a bankruptcy.
List the vehicle for sale, then notify the judge of your plan to sell the vehicle before it is finalized. While this is not required (unless the judge orders you to seek his approval before the final sale), it will look much better on your part to submit your plan first. Draft a document stating whom you are selling the vehicle to, for how much, and what you intent to do with the money. Be sure that you pay off your debt to the creditor entirely in your plan and in actuality before doing anything with any additional money you receive. Your debts should always come first.