secured debt

Can I file for Bankruptcy and Keep My Car?

One of the most common questions I get asked is “can I file for bankruptcy and keep my car.” Many people are under a misguided impression that when you file for bankruptcy all of your property gets taken away. This, however, is simply not true. You can file for and keep your car in certain circumstances. In order to determine whether you can keep your car when you file for bankruptcy, there are a few things to go over.

First, when you file a bankruptcy petition in that petition you are listing all of your debts and assets. In addition to listing all of your debts and assets you are also listing certain exemptions. These exemptions allow you to keep certain property. This, if your car falls under these exemptions you can file bankruptcy and keep your car. So let’s talk about the different kinds of car loans you may have when you file bankruptcy.

Car Loans Discharged in Bankruptcy: 

Leased Vehicle – a lease vehicle is a car loan that you take out against your car. Normally, the car is not worth as much as the vehicle. In addition, with a lease vehicle the property is never going to be yours because you plan to return the vehicle after. When you lease a vehicle since there is a loan on the car and the property has to be returned you will be able to keep and file bankruptcy. During and after the bankruptcy you will continue paying your normal lease payments. Of course, this is assuming you didn’t go out and lease a Porsche for 1500 a month. If this does happen to be your situation you may run into a few problems.

Financed Vehicle – A financed vehicle is different from a car lease. When you take out a loan to finance a vehicle you intend to own this vehicle at the end of your loan is paid off. Although you intend to own the financed vehicle this does not mean you will have to give up your car if you file bankruptcy. A lot of times when people finance a vehicle the car is worth a lot less then what the loan is worth. Even driving the car right out of the dealerships parking lot diminishes the value. If this is your situation then there is no equity in the car and you can still keep your vehicle. If however, your car is one of the more rare types of cars that does hold its value and there is equity in it, then you will need to see if the vehicle falls under one of the exemptions. If you are wondering “if I can file bankruptcy and keep my car”’you should sit down and speak with an experienced bankruptcy attorney who can go over your situation and tell you if your vehicle can be exempt for bankruptcy purposes.

I own my car-  So what if you own your car outright and there is no loan on the vehicle. In this situation again, you will have to determine how much equity is in the vehicle in order to determine whether or not you can keep the car and file bankruptcy. There are federal and state exemptions that can be used to determine if you can keep your car if you file bankruptcy.

Finding a good bankruptcy attorney is important. A good bankruptcy attorney knows what property can be exempt and what property is unexempt. If you are asking yourself “if I file bankruptcy can I keep my car” then you should speak to an experienced bankruptcy attorney? Many times people who file their own bankruptcy petitions do not know what property falls under the bankruptcy exemptions and may lose property that may have otherwise been exempt if they had just hired an attorney.