Can I Keep My Car if I File Bankruptcy?

The answer is that it depends on the situation.

For a Chapter 7, you have to not have too much equity in the car, and you need to be able to be current on the payments within about 2 months after filing. If you are far behind on the payments, a Chapter 13 is the way to go. If you have a lot of equity in the car, you will also need a Chapter 13. (If you have too much equity that you can’t keep safe, the Chapter 7 trustee will want to sell the car and use the money to pay towards your debts).

If you are far behind on a car, you can keep it safe from repossession by filing a Chapter 13. (The Chapter 13 has to be filed BEFORE the car is repossessed. Filing a 13 after a repossession will NOT get the car back for you). The amount that you owe on the car is put into the Chapter 13 case along with your other debt, and you pay it back over a 3 to 5
year period.

If you have too much equity in a car so you don’t want to file a Chapter 7, then you could file a Chapter 13 instead. You would get to keep the car, but you would pay into the case the amount of equity in the car. It would be distributed to all of your creditors.

This can all be very confusing. You do not have to sort it out yourself. A bankruptcy attorney can look at your individual situation and give you the answers that apply to you.