If you file for Chapter 7 bankruptcy and local bankruptcy laws allow you to exempt all of the equity you have in your car, you can keep the vehicle—as long as you’re current on your loan payments. They may also give you the option to pay off the equity at a discount in order to keep the car.

Are personal assets protected in bankruptcy?

It is a myth that bankruptcy mandates the loss of all your property. You can use exemptions to protect your property. If you “exempt” an asset, it will be protected from being sold to repay creditors. Protecting assets in bankruptcy usually depends on the exemptions available to you in the state where you live.

Can You Keep your car in Chapter 7 bankruptcy?

As with a house, you can keep your car in Chapter 7 bankruptcy if you’re current with your loan payments (or the car is paid off), and your state’s laws allow you to exempt your equity in the vehicle. Not surprising, the vast majority of our readers (87%) who filed under Chapter 7 were able to keep their cars.

Do you have to pay your car loan if you file bankruptcy?

Keep in mind that under either chapter, you’ll have to pay the car loan if you want to keep the vehicle. But in some instances, you might be able to pay something less than what you owe. Chapter 7 bankruptcy takes about four months to complete and doesn’t require you to enter into a repayment plan with creditors.

What happens to your car if you file bankruptcy in Florida?

The exemptions are categorical and cannot spill over to other items. For example, each person who files bankruptcy in Florida is given $1,000 to protect his or her car. If you and your spouse are filing jointly, you will be given $2,000 towards your cars.

Can a car loan be discharged in Chapter 13 bankruptcy?

You can use Chapter 13 bankruptcy to repay many different types of debt, including car loans. Here are some choices you and your attorney will consider. Surrender the car. Just like in Chapter 7 bankruptcy, if you give your car back to the lender and complete your Chapter 13 plan, the bankruptcy will discharge any remaining loan balance.