Can I Keep My Car in Bankruptcy?

Today I had a phone call from a potential client. She had just received a notice that her wages were going to be garnished. She was concerned that if her wages were garnished her family wouldn’t be able to pay their remaining bills to keep the lights on and food in the pantry. A co-worker of hers had suggested a Chapter 7 bankruptcy. She was interested in the “fresh start” that offered but was concerned if she could keep her vehicle if she filed bankruptcy. She explained that her vehicle was only a year old, she was current on her payments, and some other details.

I was able to assure that if she wanted to, she could keep her car. The choice was hers.


If you are considering bankruptcy, it is important to consider the different factors in your specific case that will affect the answer for you. These factors include:

  • The amount of equity you have in the vehicle. Equity is the amount your car is worth minus any debt you owe on it.
  • Whether you are current (or can get current) on your car payments.
  • Whether you want to keep your car. You have the option of surrendering your vehicle as part of your fresh start.