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Can I keep my car if I file bankruptcy?

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Can I keep my car if I file bankruptcy?

Can I keep my car if I file bankruptcyEntering Chapter 7 Bankruptcy where your valuable assets are seized to satisfy debts is a trying time in any adult’s life. Not only do you risk losing property that you worked hard to obtain, it is possible to endure greater hardships losing the vehicle you use to commute to work and other locations. Although lenders are not allowed to continue making contact once the bankruptcy becomes active, it is possible to have your car repossessed if they obtain proper court permission.

The creation of an automatic stay puts a stop to collection calls and property seizure, but only temporarily. If the lender decides to request that the stay is lifted, they can take your car if they prove to the court that you failed to make loan payments. It is possible to have the judge rule in your favor during the hearing only if it there is a flaw in the procedure or a mistake made by the lender. Even if you are unable to do so, in some cases it is possible to use this hearing to negotiate a new agreement with the lender. There are a few actions that you can take to avoid losing our vehicle, including the following:

Surrender your Car Before Bankruptcy

According to Nolo’s advice on avoiding repossession, you may be able to claim exemption on a vehicle if you do not owe a balance. Giving up your car is smarter than settling for repossession when the trustee is going to sell it. In scenarios that you owe more than the value of the car, or it is not considered reliable for your needs, the payment for your exemption is a good way to start over with a better car.

Reaffirm your Loan Agreement

A reliable vehicle with value greater than the remaining debt owed is worth negotiating with the lender. If you agree to keep the same payments by reaffirming the debt, you’ll be able to remain in possession of the car without factoring the action of bankruptcy. The court typically approves of these agreements if the debtor shows a valid need for the car and the ability to make payments without causing undue hardship.


Your attorney is very helpful in this scenario of filing a motion to have the car appraised for current value. The fair market value is usually lower than the amount owed when reaffirming car loans so you’ll have an easier time keeping up with payments.

You can speak to one of our attorneys by calling 1-866-964-6529 if you need us to help you negotiate with your lender to keep your car. We specialize in helping individuals overcome financial hardships to get back on the right track.