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How to File Bankruptcy and Keep Your Car: Legal Steps That Work
How to File Bankruptcy Chapter 11 and Restructure Debt Properly How to file bankruptcy Chapter 11 is a key question
July 23, 2025
How to File Bankruptcy and Keep Your Car: Legal Steps That Work
How to File Bankruptcy Chapter 11 and Restructure Debt Properly
How to file bankruptcy Chapter 11 is a key question for business owners and individuals with significant debt who want to reorganize rather than liquidate. Chapter 11 bankruptcy allows for the restructuring of debts while maintaining business operations or managing high-value personal assets.
In this blog, we’ll cover how to file bankruptcy Chapter 11, who qualifies, and what to expect during the process.
Understanding Chapter 11 Bankruptcy Basics
Chapter 11 is primarily used by businesses, but individuals with complex financial situations, such as high-value property or large debts, can also file. The process involves creating a repayment plan that allows the filer to reorganize debt over time while continuing operations.
Key Features of Chapter 11
- You remain in control of your business or finances as a debtor in possession
- Creditors must approve your reorganization plan
- It can stop foreclosures, lawsuits, and creditor collection efforts
- The plan typically lasts 3 to 5 years, sometimes longer
Knowing how to file bankruptcy Chapter 11 starts with understanding if this is the right chapter for your financial goals.
How to File Bankruptcy Chapter 11 Step by Step
Here is a breakdown of how to file bankruptcy Chapter 11:
Evaluate Your Eligibility
- Chapter 11 is available to businesses and individuals with debts exceeding Chapter 13 limits
- It’s often chosen by corporations, partnerships, and LLCs, but also by high-income earners
Complete Required Credit Counseling
- You must take a court-approved credit counseling course within 180 days before filing
Prepare and File Bankruptcy Forms
You’ll need to file a petition with the bankruptcy court, which includes:
- A list of assets and liabilities
- Current income and expenses
- Statement of financial affairs
- List of contracts, leases, and creditors
Pay the Filing Fee
- Chapter 11 requires payment of court filing and administrative fees, which are set by the bankruptcy court
Create and Submit a Reorganization Plan
This is the heart of Chapter 11:
- You propose how debts will be repaid over time
- Secured creditors may get priority
- Some debts may be addressed through the court-approved reorganization plan
- Creditors vote to accept or reject the plan
The court holds a confirmation hearing to determine whether the plan is fair and feasible.
Fulfill Plan Obligations and Report Progress
Once the plan is approved:
- You make monthly payments according to the plan
- You file periodic reports with the court
- Once complete, debts included in the plan are discharged
Learning how to file bankruptcy Chapter 11 means being ready for a complex process, but one that allows long-term debt relief and recovery.
When Chapter 11 Makes Sense
Filing Chapter 11 is a strategic choice. It may be the right option if:
- You’re trying to keep your business running during financial hardship
- You have significant real estate holdings or investments
- You’ve exceeded the Chapter 13 debt limits
- You need flexibility in negotiating with creditors
Chapter 11 is not quick or inexpensive, but it can save your business or protect high-value personal assets from liquidation.
Get Help with How to File Bankruptcy Chapter 11
Need guidance on how to file bankruptcy Chapter 11? This process is legally complex and involves critical decision-making. The team at BankruptcyAttorneys.net offers a free evaluation to assess your financial situation and determine if Chapter 11 is the right fit.
Start building your reorganization plan today with support from experienced professionals.
Frequently Asked Questions (FAQs)
How to File Bankruptcy and Keep Your Car in the Process
Understanding how to file bankruptcy and keep your car is critical if you rely on your vehicle for work, family, or essential tasks. Thankfully, filing bankruptcy doesn’t always mean losing your car. With the right approach and legal strategy, you can protect your vehicle and still get debt relief.
In this guide, we’ll walk through how bankruptcy works, how to protect your car under Chapter 7 and Chapter 13, and what options you may have if your car loan is behind.
Bankruptcy Chapters and Vehicle Protection
When you’re figuring out how to file bankruptcy and keep your car, the first decision is which chapter to file under. The two most common consumer options are Chapter 7 and Chapter 13.
Chapter 7 Bankruptcy
Chapter 7, also known as liquidation bankruptcy, allows you to eliminate unsecured debts quickly. However, you must meet income qualifications and may need to give up non-exempt property.
In most states, you’re allowed to protect a certain amount of vehicle equity under exemption laws. If your car’s equity falls below that limit, you can likely keep it. If it’s above the exemption, the trustee may sell the car to repay creditors—unless you take specific actions to protect it.
Chapter 13 Bankruptcy
Chapter 13, or the wage earner’s plan, is more flexible if you’re behind on car payments. This option allows you to restructure debt and catch up on missed payments over 3–5 years. In many cases, you can keep your car even if it’s not fully exempt, as long as it fits into your repayment plan.
If you want to explore more about how Chapter 13 works, consider reviewing how to file Chapter 13 bankruptcy.
Options to Keep Your Car in Bankruptcy
Even if your car has significant equity or you’re behind on your loan, there are still ways to retain it during the bankruptcy process.
Use State or Federal Exemptions
Each state offers a vehicle exemption amount that protects a portion of your car’s equity. Some states allow you to choose between federal and state exemptions, whichever protects more of your property.
Reaffirm the Car Loan (Chapter 7)
In a Chapter 7 case, you can “reaffirm” your car loan. This means you agree to continue making payments and keep the car. The court must approve the agreement, and you must show that you can afford the loan going forward.
Catch Up Through a Chapter 13 Plan
If you’re behind on payments but want to keep the car, Chapter 13 allows you to spread those missed payments over the life of your repayment plan. This may help prevent repossession and can provide time to stabilize your finances.
Redeem the Car (Chapter 7)
Another option under Chapter 7 is redemption. This allows you to pay the lender the current value of the vehicle in a lump sum, even if you owe more on the loan. While harder to fund, it’s a way to keep the car and eliminate future payments.
Filing Bankruptcy Without Losing What Matters
The key to how to file bankruptcy and keep your car is understanding your rights and exemptions. Work with a bankruptcy attorney to evaluate your car’s value, the applicable exemptions in your state, and the best chapter for your situation. A skilled attorney can help you complete the forms correctly and address issues related to vehicle protection.
Get Help with How to File Bankruptcy and Keep Your Car Today
If you’re worried about how to file bankruptcy and keep your car, you’re not alone. Legal professionals can help you choose the right chapter, apply exemptions, and navigate lender requirements. Start with a free evaluation from Bankruptcy Attorneys to discuss your options and understand how bankruptcy may affect your property.
Frequently Asked Questions (FAQs)
1. Will I lose my car if I file Chapter 7 bankruptcy?
Not always. If your equity is below the exemption limit or you reaffirm the loan, you can keep your vehicle.
2. Can I keep a financed car in Chapter 13 bankruptcy?
Yes. Chapter 13 allows you to catch up on past-due payments and continue driving the car while making plan payments.
3. What if my car is worth more than the exemption?
You may need to pay the difference, surrender the car, or file Chapter 13 to include the equity in your repayment plan.
4. Is it better to file bankruptcy before or after a car repossession?
Filing before a repossession gives you more options to protect your vehicle, especially with the automatic stay that halts collections.
5. Can I buy a new car after bankruptcy?
Yes, although you may face higher interest rates. Many people finance a new vehicle within a year of discharge.
Key Takeaways
- Filing Chapter 7 or 13 can help you keep your car with the right legal approach
- State and federal exemptions protect vehicle equity in most cases
- Reaffirmation and redemption are tools to retain financed vehicles under Chapter 7
- Chapter 13 allows you to catch up on missed payments over time
- Legal guidance is key to preserving your car and getting debt relief
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