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?

Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
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
. 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.
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