Can I Keep My Car if I File Bankruptcy?
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The bankruptcy code has set rules to allow you to keep certain personal property in order to continue to earn a living after you file bankruptcy. They do this through the use of bankruptcy exemptions. There are Federal and state exemptions which tell the bankruptcy trustee and court that you can keep this property if it is worth up to a certain amount.
Your car or other personal automobile is included in these exemptions. You will be able to keep your car after you file bankruptcy if you car is worth less than, or equal to the exemption amount. So if you have an old car that is only worth $500 and the car exemption is $2500 you can keep the car. If your car is worth $3000 you will have to cover the $500 that is not exempt in order to keep the car.
If you are leasing a car, or making payments on a car you will have to decide what you want to do on the Statement of Intention when you file chapter 7 bankruptcy, letting the trustee know if you want to hand it in or continue paying by signing a reaffirmation agreement. The bankruptcy trustee will have to approve the reaffirmation in order for you to keep your car, and that is typically done by assessing your ability to pay the debt.
If you have a car that is worth a lot of money, or multiple cars, you will want to consult with a bankruptcy attorney in order to see what will likely happen when you file. A good attorney can help you prepare before filing in order to keep as much property as possible.
