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If You File Bankruptcy Can You Keep Your Car?
If You File Bankruptcy Can You Keep Your Car? Here’s What You Need to Know If you file bankruptcy can
October 9, 2025
If You File Bankruptcy Can You Keep Your Car?
If You File Bankruptcy Can You Keep Your Car? Here’s What You Need to Know
If you file bankruptcy can you keep your car? This is one of the most common concerns for people considering bankruptcy. The answer depends on the type of bankruptcy you file and your specific financial situation.
In this guide, we’ll break down how bankruptcy impacts car ownership, what exemptions may apply, and the strategies you can use to protect your vehicle during the process.
How Bankruptcy Affects Your Car
Bankruptcy doesn’t always mean you’ll lose your car. Whether you can keep it depends on several factors:
- The chapter of bankruptcy you file (Chapter 7 vs. Chapter 13)
- How much equity you have in the car
- Your ability to continue making payments
- State exemption laws
Let’s take a closer look at how these factors come into play.
Understanding Car Treatment in Chapter 7 Bankruptcy
In Chapter 7 bankruptcy, your assets may be sold to pay off debts. However, bankruptcy law allows you to claim exemptions that protect certain property.
Will You Lose Your Car in Chapter 7?
If you file bankruptcy can you keep your car under Chapter 7? You might, but only if:
- Your equity is fully covered by a state vehicle exemption
- You’re current on your loan payments
- You continue to make payments if the car is financed
If your car is worth significantly more than what you owe and exceeds the exemption limit, the bankruptcy trustee may sell it to repay creditors. If you’re behind on payments, your lender may still repossess the car, even if it’s exempt.
Chapter 13 Bankruptcy and Car Retention
If you file bankruptcy can you keep your car in Chapter 13? You have a better chance.
In this type of bankruptcy, you create a repayment plan to pay debts over 3 to 5 years. You’re allowed to keep all your property, including your car, as long as you stick to the plan.
How Chapter 13 Helps You Keep Your Car
- You can catch up on missed payments over time
- You may reduce your car loan balance through “cramdown” if the loan is older than 910 days
- Reaffirmation or redemption isn’t required as in Chapter 7
Chapter 13 can be an effective strategy for those who are behind on car payments but want to keep their vehicle.
Tips to Help You Keep Your Car in Bankruptcy
If you file bankruptcy, can you keep your car? Yes—especially if you plan ahead and understand your options:
- Review state exemptions for vehicles
- Stay current on your loan if possible
- Consider Chapter 13 if you’ve fallen behind
- Consult a bankruptcy attorney to evaluate the best path
Bankruptcy laws vary by state, and the specifics of your case will influence your outcome.
Keep Your Vehicle While Managing Debt
Bankruptcy may feel like a financial reset, but it doesn’t mean losing everything. If you file bankruptcy can you keep your car? Yes, many filers do—especially when they know their rights and choose the right chapter for their situation.
Get Help with Keeping Your Car in Bankruptcy
If you’re worried about losing your vehicle, don’t wait to explore your options. Filing the right type of bankruptcy with a clear strategy can help you keep what matters most.
Visit BankruptcyAttorneys.net to request a free evaluation. Whether you’re facing repossession or want to know your options, a skilled bankruptcy attorney can guide you through the process and help protect your car.
Frequently Asked Questions (FAQs)
1. Can I keep my car if it’s fully paid off?
Yes, if the car’s value falls within your state’s exemption limit, you can typically keep it in both Chapter 7 and Chapter 13.
2. What happens if my car is worth more than the exemption?
In Chapter 7, the trustee may sell the car to repay creditors. In Chapter 13, you can usually pay the excess value through your repayment plan.
3. Can I keep a leased vehicle during bankruptcy?
Yes, but you must continue making lease payments and may need to reaffirm the lease, depending on your chapter.
4. Does reaffirming my car loan help me keep the car?
In Chapter 7, reaffirming means you agree to keep paying the loan and keep the vehicle. It’s optional but often necessary if you want to keep it.
5. Is filing Chapter 13 better for keeping a car?
Yes, especially if you’re behind on payments or your car has significant equity. Chapter 13 gives you more flexibility.
Key Takeaways
- If you file bankruptcy can you keep your car? Yes, it depends on your situation.
- Chapter 7 may allow you to keep your car if it’s exempt and payments are current.
- Chapter 13 offers better protection for car owners behind on payments.
- State exemptions play a critical role in whether your car is protected.
- An experienced bankruptcy attorney can help you build a plan to keep your car.
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