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Can I File Bankruptcy and Keep My Car? Here’s What to Know
Can I File Bankruptcy and Keep My Car? Can I file bankruptcy and keep my car is a common concern
September 3, 2025
Can I File Bankruptcy and Keep My Car? Here’s What to Know
Can I File Bankruptcy and Keep My Car?
Can I file bankruptcy and keep my car is a common concern for people considering debt relief. In some cases, it may be possible. Whether you file Chapter 7 or Chapter 13, there may be legal options to address vehicle ownership depending on the circumstances.
This article breaks down how to keep your car, what exemptions may apply, and what options are available if you’re behind on payments.
Bankruptcy Type Matters When Keeping Your Car
Chapter 7 Bankruptcy: Liquidation Rules
In Chapter 7 bankruptcy, non-exempt assets can be sold to repay creditors. However, some individuals are able to keep their cars because:
- State or federal laws often protect a certain amount of car equity
- If your car is paid off and its value falls within applicable exemption limits, it may be treated as exempt
- If you’re still making payments, reaffirmation of the loan may be an option in some cases
You must also stay current on the loan. If you fall behind, the lender may repossess the car even during bankruptcy.
Chapter 13 Bankruptcy: Repayment Protection
Chapter 13 offers more flexibility. You create a 3–5 year repayment plan to catch up on overdue debts, including car loans. This structure may allow individuals to:
- Address missed payments through a repayment plan
- Include a vehicle loan as part of the plan, depending on eligibility
- Temporarily pause certain collection actions, subject to court approval
If your car loan was taken out more than 910 days before filing, loan terms may be addressed differently under the plan, depending on statutory requirements.
Key Factors That Affect Whether You Can Keep Your Car
Can I file bankruptcy and keep my car if I have equity or missed payments? That depends on several factors:
- Your car’s equity (value minus what you owe)
- State exemption laws protecting vehicle equity
- Whether you’re current or behind on payments
- Which chapter of bankruptcy you file
Factors that may be relevant include:
- Determine your state’s vehicle exemption limit
- Keep loan payments current, especially in Chapter 7
- In Chapter 13, include the loan in your repayment plan
- Work with an attorney to avoid common mistakes
What to Do If You’re Behind on Payments
If you’ve missed one or more car payments, the risk of repossession increases. Filing bankruptcy—particularly Chapter 13—may temporarily pause repossession activity and provide a structured way to address missed payments.
But if you can’t afford your car even after restructuring, you might choose to surrender it voluntarily. In that case, remaining obligations may be addressed depending on the type of bankruptcy and other factors.
Some filers also consider trading down to a more affordable vehicle or buying a car after bankruptcy using a secured auto loan.
Keep Your Car and File Bankruptcy Legally
The question can I file bankruptcy and keep my car depends on timing, your payment history, and state laws. With the right planning and legal guidance, some filers are able to retain their vehicles, depending on their circumstances.
Whether you file Chapter 7 or Chapter 13, there may be options available to address transportation needs.
Get Help with Filing Bankruptcy and Keeping Your Car
If you’re asking can I file bankruptcy and keep my car, you’re not alone. A bankruptcy professional can help assess your car’s value, equity, and loan status to discuss potential options based on your situation.
Visit BankruptcyAttorneys.net today to request a free evaluation to discuss how vehicle-related debts may be handled in bankruptcy.
Frequently Asked Questions (FAQs)
1. Can I keep my car if it’s paid off?
Yes—if your car is paid off and its value is within the exemption limit, you can usually keep it during bankruptcy.
2. Can I keep my car if I’m still making payments?
Yes, but you’ll need to stay current or include the loan in a Chapter 13 repayment plan. Reaffirmation may be required in Chapter 7.
3. What happens if my car is worth more than the exemption limit?
In Chapter 7, the trustee may sell the car and return the exempt portion to you. In Chapter 13, you can keep it by paying the difference over time.
4. Can filing bankruptcy stop a car repossession?
Yes. The automatic stay stops all repossession efforts. Chapter 13 also lets you catch up on missed payments through a court-approved plan.
5. Should I keep a car I can’t afford?
Not always. If the loan is too large, surrendering the car in bankruptcy may be a better long-term solution. The remaining loan may be discharged.
Key Takeaways
- You can often keep your car in both Chapter 7 and Chapter 13
- State exemption laws protect a portion of your vehicle’s equity
- Chapter 13 allows you to catch up on missed payments over time
- Filing bankruptcy can stop repossession and lower loan obligations
- Legal guidance helps you keep your vehicle while resolving your debt
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