Helping With Your Financial Future

Can you keep your car during bankruptcy?

On Behalf of | Dec 9, 2020 | Bankruptcy Exemptions

If you can’t pay off your debts in California, filing for bankruptcy might be the only option. Your credit score will take a hit, but you’ll be able to discharge some of your debts and start fresh. However, you might also have to sacrifice some of your assets in the process. Will you have to give up your car if you file for Chapter 7 bankruptcy?

What happens to your car if you file for bankruptcy?

When you file for Chapter 7 bankruptcy, you might have to sell some of your assets to pay off your debts. In some situations, that might include your vehicle. However, you might be able to keep your vehicle if it’s exempt from liquidation.

Some states allow you to keep certain assets if you have a certain amount of equity. In the case of vehicles, you might be able to keep your car if the equity is less than the exemption amount. However, if the equity is greater than the exemption amount, the trustee of your bankruptcy case might sell your vehicle to help you pay off your debts.

You’ll also have to be up-to-date on your car payments to keep your vehicle. If you’ve fallen behind, the lender might be able to seize your vehicle. You can also give up your car willingly if you can’t make the monthly payments. You might want to consult an attorney about which option is best for your situation.

What’s the best way to file for Chapter 7?

Regardless of your individual situation, an attorney could guide you through the entire bankruptcy process. Legal counsel could help you discharge certain debts, pay off others and get your finances back in order. If you’re worried about losing certain assets, an attorney might be able to help you keep certain properties like your car or house.