How do i file bankruptcy and keep my car?

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Filing for bankruptcy can be a difficult decision, but it may be necessary to regain control of your financial situation. One common concern for individuals considering bankruptcy is how to keep their car during the process. In this article, we will explore the steps you can take to file bankruptcy and keep your car.

Understanding Bankruptcy

Before delving into the specifics of keeping your car during bankruptcy, it’s essential to have a basic understanding of the bankruptcy process. Bankruptcy is a legal process that allows individuals or businesses to seek relief from overwhelming debts. There are different types of bankruptcy, but the most common for individuals are Chapter 7 and Chapter 13 bankruptcy.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy, also known as liquidation bankruptcy, involves the sale of non-exempt assets to repay creditors. However, certain assets, including a car, can be exempted from the bankruptcy estate. Each state has its own set of exemptions, and it’s crucial to understand your state’s specific rules to determine if your car qualifies for exemption.

Exemptions: In Chapter 7 bankruptcy, exemptions allow you to protect specific assets from being sold to repay creditors. These exemptions typically include a vehicle exemption, which allows you to keep your car up to a certain value. If your car’s value is within the exemption limit, you can usually keep it during the bankruptcy process.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy, also known as reorganization bankruptcy, involves creating a repayment plan to pay off your debts over a three to five-year period. Unlike Chapter 7, Chapter 13 bankruptcy does not require the sale of assets. Instead, you can keep your property, including your car, as long as you continue making the agreed-upon payments under the repayment plan.

Repayment Plan: In Chapter 13 bankruptcy, you will work with a bankruptcy trustee to create a repayment plan based on your income and expenses. The plan will outline how much you need to pay each month to repay your debts. If you want to keep your car, it’s important to include the car loan payments in your repayment plan.

Reaffirmation Agreement

In both Chapter 7 and Chapter 13 bankruptcy, you may have the option to sign a reaffirmation agreement with your car lender. A reaffirmation agreement is a legally binding contract that allows you to keep your car by agreeing to continue making payments on the loan. By signing this agreement, you essentially exclude the car loan from the bankruptcy discharge, making you personally liable for the debt.

Considerations: Before signing a reaffirmation agreement, it’s crucial to carefully consider your financial situation. Evaluate whether you can afford the car loan payments and if keeping the car is in your best interest. If you’re uncertain, it may be wise to consult with a bankruptcy attorney who can provide guidance based on your specific circumstances.


Filing for bankruptcy doesn’t necessarily mean you have to give up your car. Depending on the type of bankruptcy you file and your specific circumstances, you may be able to keep your car by utilizing exemptions, including it in a repayment plan, or signing a reaffirmation agreement. However, it’s essential to understand the rules and requirements of your state and seek professional advice to make informed decisions during the bankruptcy process.


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