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Chapter 7 Bankruptcy

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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 for people considering debt relief. The good news is: in many cases, you can. Whether you file Chapter 7 or Chapter 13, there are legal ways to hold on to your vehicle—if you meet certain conditions.

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, most people 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 is under the exemption limit, you can usually keep it
  • If you’re still making payments, you may be able to reaffirm the loan

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 allows you to:

  • Keep your car, even if you’re behind on payments
  • Possibly reduce your car loan balance (called a “cramdown”)
  • Avoid repossession through court protection

If your car loan was taken out more than 910 days before filing, you might even pay only the current value of the car, not the full loan amount.

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

To maximize your chances of keeping your car:

  1. Determine your state’s vehicle exemption limit
  2. Keep loan payments current, especially in Chapter 7
  3. In Chapter 13, include the loan in your repayment plan
  4. 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—especially Chapter 13—can stop repossession and help you catch up over time.

But if you can’t afford your car even after restructuring, you might choose to surrender it voluntarily. In that case, the debt on the vehicle may be discharged.

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, many filers are able to retain their vehicles, even during financial hardship.

Whether you file Chapter 7 or Chapter 13, you do have options to protect your transportation and stay on the road.

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 guide you toward the best solution.

Visit BankruptcyAttorneys.net today to request a free case evaluation and learn how to protect your vehicle while resolving your debt.

Frequently Asked Questions (FAQs)

Yes—if your car is paid off and its value is within the exemption limit, you can usually keep it during bankruptcy.

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.

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.

Yes. The automatic stay stops all repossession efforts. Chapter 13 also lets you catch up on missed payments through a court-approved plan.

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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