You may keep your car in chapter 7 bankruptcy by exempting the equity in it. The value of your car minus any outstanding payments is its equity. The amount of equity you can exempt varies by state, but if it covers the whole value of your car, you may keep it. You will likely be able to find a lender to help you buy a car, even chapter 7 bankruptcy, but the terms may not be as favorable if they see you as a high risk borrower. If you have cash available, then you will be able to buy a car without any trouble. If you have cash available to buy a car while in chapter 7 bankruptcy, then you may do so without any problems. If you need to get a loan, you will need the court's permission and a willing lender. Be aware that the terms of a loan you get may not be as favorable if you are in bankruptcy.Can I Buy a Car After Chapter 7 Bankruptcy?
Can I Buy a Car While in Chapter 7 Bankruptcy?
What Happens to My Car in Chapter 7 Bankruptcy? FAQs
Chapter 7 bankruptcy is an individual form of bankruptcy governed by federal law that provides relief from debts through the liquidation of non-exempt assets and discharge of unsecured debt.
In most cases, yes. Many states have laws allowing you to keep a vehicle up to a specified value if it is used as your main source of transportation for work or other important reasons.
The court will evaluate the equity in your vehicle and consider any applicable state or federal exemptions to determine whether you can keep the car.
If your vehicle is not exempted by state or federal law, it may be sold and the proceeds used to pay off some of your creditors.
Generally speaking, yes. Unsecured loans such as auto loans will usually be discharged in a Chapter 7 bankruptcy case. However, the lender may still have the right to repossess any property given as collateral for the loan (such as the car itself).
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.