Q: Can I file bankruptcy on my car and still keep it?
A:
Car loans are typically secured debts, and filing for Chapter 7 bankruptcy does not allow you to keep property that serves as collateral for a debt while eliminating the debt.
Depending on the value of your car, the amount of the debt and other factors, you may have a few options regarding your car. For example, perhaps discharging your unsecured debts in Chapter 7 bankruptcy would allow you to catch up your car payments and keep your car. Or, maybe Chapter 13 bankruptcy would give you the breathing room you need to catch up your payments over time. In some circumstances, if you've been paying on your car loan for long enough and the vehicle is worth less than you owe, you may be able to reduce the amount due on the loan in Chapter 13 bankruptcy.
A local bankruptcy lawyer will be able to walk through all of the options with you in detail, once he or she has the details of your financial circumstances and the loan in question.
*Kevin Chern is an Illinois licensed attorney who has practiced in federal consumer bankruptcy law and consumer protection law for the last 21 years. He is the Managing Partner of UpRight Law. Kevin's law partners are licensed in all 50 states and work in conjunction with Mr. Chern to provide bankruptcy and consumer legal services in all 50 states. Mr. Chern's answers to the questions are intended for informational purposes only and are not intended to be legal advice. Use of the answers does not establish any attorney-client relationship. For legal advice, you should consult with an attorney licensed to practice law in your state and with appropriate expertise.
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