Can I file bankruptcy on a car loan?

I can’t keep up with my car loan payments, and I don’t know what to do. I need the car, but the payments are just too much! Is it possible to file for bankruptcy on a car loan?

Finances can be tricky, and keeping up with all the monthly payments can feel impossible. Unfortunately, you cannot file bankruptcy on a single loan. If you file for bankruptcy, the court will review and assess all your finances.
So your car loan may be discharged during bankruptcy—but you probably won’t be able to keep your car. Most car loans hold the car as collateral, so discharging the loan would be like defaulting on it. In either case, the lender would repossess your car.
But you may be able to keep your car in chapter 7 bankruptcy if you’re up to date on payments and have less than the maximum allowed equity in the car. But if you’re already having trouble keeping up with payments, it’s unlikely you’ll be allowed to keep it.
If you’re struggling to keep up with your monthly bills, start saving on car insurance with Jerry. A licensed broker, the Jerry app helps users save an average of $879 a year on car insurance—and it only takes a minute to sign up!
Liz Jenson
Answered on Nov 18, 2021

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