Can you include your car loan in bankruptcy?

I’m having trouble meeting my debt obligations, so I’m going to file for bankruptcy. However, I want to keep my car. Can I include my car loan in bankruptcy and still keep the car?

Answer
Bankruptcy is always a stressful time, but you’ll come out better on the other side! As far as your car loan, you may be able to keep your car depending on whether you choose Chapter 7 or Chapter 13 bankruptcy. Your car loan is secured debt, which means you may also lose your car if you default on the loan.
You can include your car loan in Chapter 7, but you may not be able to keep your vehicle. Depending on your area, Chapter 7 may include an equity exemption that allows you to keep the car if you don’t have much equity in it. For example, if your exemption is for up to $5,000 in equity, you could keep the car if you only have $3,000 in it.
That said, your lender can repossess the car if you’re behind on your payments. So it’s not a feasible option unless you’re on top of your debt. Plus, your court-appointed trustee can sell your car to pay off any debt obligations.
In Chapter 13 bankruptcy, you can include your vehicle in your debt reorganization. In most cases, the trustee will negotiate with your lender to help you keep the car for less money or reassess your current payment plan.
If you include your car loan in bankruptcy but decide to keep it, you can save hundreds of dollars by shopping for new car insurance with Jerry. A licensed broker, the Jerry app helps you compare personalized quotes from over 50 top insurers like Progressive and Nationwide for free. That way, you know you’re getting the best available rate before you settle.
Eric Schad
Answered on Nov 19, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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