Can I Keep My Car in Bankruptcy?

One of the most significant decisions you’ll make during bankruptcy is keeping your car or surrendering it to the creditor.

If you have negative equity in your car (meaning you owe more than it’s worth), consider surrendering it during your bankruptcy. After bankruptcy, getting rid of a significant monthly car loan can improve your monthly finances/budget. Of course, that is easier said than done because many of us NEED to keep our car for work/family, etc., so the good news is:

Yes, you can keep your car when you file for bankruptcy

When most people file for bankruptcy, they assume they will have to give up their cars. However, this is only sometimes the case. It is possible to keep your vehicle when you file for bankruptcy. This can be a great relief for those worried about losing their primary means of transportation.

Contact our Oakland Bankruptcy Attorney for a consultation.

You will need to continue making payments on the car during and after bankruptcy.

When you file for bankruptcy, you may assume that all of your debts will be discharged, and you will no longer be responsible for payments. If you want to keep your car, you will need to continue making payments on the loan. The lender can take the vehicle back if you fall behind on payments. If your default I finished, the lender can repossess your car if you fall behind. The lender must first ask permission if you are still in bankruptcy.

What if I am behind on my car payments?

When you file a chapter 7 bankruptcy, for you to keep your car, you need to be current on the payments. If you are not present on your payments, consider filing a chapter 13 bankruptcy. Under chapter 13, you can keep your car and get caught up on your past payments through bankruptcy over 3-5 years. 

 Other factors will also impact your ability to keep your car during bankruptcy.

If your equity exceeds the exemption limits, it may be challenging to keep your vehicle. An attorney can help you create a plan to protect your vehicle. You can buy excess equity from the bankruptcy trustee. Talk to an experienced bankruptcy attorney in Oakland to learn about California exemptions and how they can impact your ability to keep your car during bankruptcy.