You can file bankruptcy on a car loan, but it’s not the best way to get out of your car loan, especially if you have other options (such as a debt settlement with a creditor). You won’t necessarily be able to both get rid of the loan and keep your car.

There are two types of bankruptcy. Chapter 7 is for people who can’t pay their debts. 澳洲幸运5开奖号码历史查询:Chapter 13 reorganizes how you will pay your debts.

If you declare Chapter 7 bankruptcy, your car will be repossessed unless it’s worth less than a specific amount, or youꦛ either pay off your loan or promise to keep paying it.

If you declare Chapter 13 bankruptcy, you’ll agree to keep paying off your car loan but under different 澳洲幸运5开奖号码历史查询:loan terms.

Steps to File for Bankruptcy

澳洲幸运5开奖号码历史查询:Filing for bankruptcy has consequences that can affect your assets and your c💧redit. It's important that you uꦇnderstand them before you file.

For instance, depending on the bankruptcy chapter that you choose, your assets may need to be sold to pay off your debts.

In addition, a bankruptcy becomes part of your 澳洲幸运5开奖号码历史查询:credit report. Only after seven or 10 years (based on the bankruptcy) will evidence of it be removed. That means your credit will be affected negatively, making loans of any kind difficult to obtain.

Prepare to file for bankruptcy by takin🌞g the following steps:

• Consult an attorney who can recommend the type of bankruptcy that's appropriate for you.
• Attend 澳洲幸运5开奖号码历史查询:credit counseling. Before you file, you are required to attend a counseling session with a credit counseling organization approved by the U.S. Department of Justice’s U.S. Trustee Program.
• List your debts, including your car loan.

Cars and Bankruptcy

Whether you🦩 can keep꧙ your car depends on the type of bankruptcy that you file for.

Chapter 7 Bankruptcy

When you file for Chapter 7 bankruptcy, you are required to sell your assets to repay your debts. In some cases, you will be required to sell your car or return it to your lender in order to pay off your car loan.

If you are making monthly payments on a loan, the lender holds the title to your car as 澳洲幸运5开奖号码历史查询:collateral. Once you’ve paid off your loan, you get the title and own the car free and clear. If you can’t make payments, the lender may take the car back as part of your bankruptcy process.

Exception

However, there is an exception to this. Most states offer an exemption for motor vehicles during a Chapter 𝔍7 bankruptcy. Whether this applies to you depends on:

• Whether you are up to date on your loan repayments
• The law in your state
• How much equity you own in your car.

The federal 澳洲幸运5开奖号码历史查询:exemption for motor vehicles is $4,450 until 2025. If you have less equity than this and you are current on your loan 澳洲幸运5开奖号码历史查询:repayments, you should be able to keep your car.

However, ✱31 states have their own exemptions that those filing bankruptcy must 🌸abide by. Be sure to check the exemption for your state.

Chapter 13 Bankruptcy

Chap🐈ter 13 bankruptcy is known as “reorganization bankruptcy.” If you file for Chapter 13 bankruptcy, your debts will be restructured so that you can repay them more easily.

Chapter 13 bankruptcy generally doesn’t require you to give up your car, so you can keep it throughout the proceedings.

How to Protect Your Car After Filing

If you want to be sure you can keep your car during bankruptcy proceedings, try to pay off your car loan before filing. If you own your car outright, you can claim the federal exemption for motor vehicles during the proceedings. That means if your car is worth less than $4,450, you can keep it.

Or, if you file for Chapter 7 bankruptcy, you may be able to sign a reaffirmation agreement. This is a commitment to keep making car repayments as if you hadn’t filed for bankruptcy. This will allow you to keep your car loan (and car). Just make sure that you can still make the monthly payments.

The Bottom Line

Bankruptcy isn't always the best way to 澳洲幸运5开奖号码历史查询:get out of your car loan. Generally, you won’t be 🅺able to both, get rid of the loan and keep your car if you still owe on your car loan.

However, there are exceptions to this rule that may allow you ꦺto keep your car if yo🌠ur equity in the car is below a certain exemption amount.

Whether you can keep your car during bankruptcy proceedings depends on a variety of factors: the type of bankruptcy that you apply for, whether your ca🧸r loan is in good s🌌tanding, how much your car is worth, and other financial circumstances.

The rules that govern bankruptcy are complex, so be sure to consult an attorney before starting the process.