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Will I lose my financed car if I file for bankruptcy?

On Behalf of | May 12, 2023 | bankruptcy |

But what happens if you’re drowning in debt and can’t pay your bills? If you can’t keep up with your bills, filing for bankruptcy may help stop creditors from collection activities. However, whether you will be able to keep your car or not will mainly depend on your situation. Most people who file for bankruptcy protection do not lose their vehicles.

In a Chapter 7 bankruptcy

If you do not have a lot of equity in your car and are current on the payments, you can normally reaffirm the debt.

In a Chapter 13 bankruptcy

If your car has too much equity or you are seriously behind on the payments, you can usually save it by filing Chapter 13. This is a reorganization bankruptcy. In this type of bankruptcy, you have to sign up for a payment plan and repay some of your debt over a specific time. This lets you keep your car and catch up on the loan payments.

Before filing for bankruptcy, understanding how it can affect your assets, including your car, is essential. However, consider seeking legal assistance before filing for bankruptcy to make the process easier. With the right guidance, you may be able to take the necessary steps to keep your car.