What Happens to My Car in Chapter 7 Bankruptcy?

Written by True Tamplin, BSc, CEPF®

Reviewed by Editorial Team

Updated on March 08, 2023

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.

Can I Buy a Car After Chapter 7 Bankruptcy?

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.

Can I Buy a Car While in Chapter 7 Bankruptcy?

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.

What Happens to My Car in Chapter 7 Bankruptcy? FAQs

About the Author

True Tamplin, BSc, CEPF®

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.

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