Drive Out of Debt: Can I Keep My Car If I File Chapter 13?

Can I Keep My Car If I File Chapter 13?

If you find yourself in a difficult financial situation and decide to file for Chapter 13 bankruptcy, you may be concerned about what will happen to your car. It’s a common question that many people have, and the good news is that in most cases, you can indeed keep your car if you file Chapter 13.

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Understanding Chapter 13 Bankruptcy

Chapter 13 bankruptcy is often referred to as the “wage earner’s plan.” It is a form of bankruptcy that allows individuals with regular income to create a plan to repay all or part of their debts over a period of time, typically between three to five years. This type of bankruptcy allows you to keep your assets and develop a reasonable repayment plan based on your income.

When you file for Chapter 13 bankruptcy, you are required to submit a repayment plan to the court. This plan outlines how you intend to pay off your debts, including any arrears on secured debts, such as your car loan or mortgage.

Keeping Your Car in Chapter 13 Bankruptcy

If you file for Chapter 13 bankruptcy, you will have the opportunity to keep your car, as long as you can continue making your regular monthly payments. However, it’s important to note that there are a few factors that may influence your ability to keep your car:

1. Current On Payments

In order to keep your car, you must be current on your car loan payments at the time of filing for Chapter 13 bankruptcy. If you are behind on your payments, you may need to include the arrears in your repayment plan and continue making payments as agreed.

2. Affordability

Your repayment plan must be feasible and affordable. If you cannot afford to include your car loan payments in your plan, you may face difficulties in keeping your car. It is essential to work closely with your bankruptcy attorney and financial advisor to ensure that you develop a realistic plan that accommodates your car loan payments.

3. Equity In The Car

If you have equity in your car, it may affect your Chapter 13 bankruptcy case. The trustee assigned to your case will take into consideration the value of your car and how much you owe on it. If you have significant equity, the trustee may propose selling the car to partially repay your creditors. However, in most cases, you can negotiate with the trustee or propose a plan to retain ownership of your vehicle while compensating the creditors for the equity.

Benefits of Keeping Your Car in Chapter 13 Bankruptcy

Keeping your car during Chapter 13 bankruptcy can provide some valuable benefits:

  • Transportation: Holding onto your car means you can maintain reliable transportation to work or carry out daily activities.
  • Avoiding repossession: Filing for Chapter 13 bankruptcy can prevent your car from being repossessed by your lender, as it puts an automatic stay on all creditor actions.
  • Reduced interest rates: In some cases, you may be able to negotiate lower interest rates or modify your car loan terms as part of your repayment plan.
  • Debt consolidation: Through Chapter 13 bankruptcy, you can consolidate all your debts into one manageable monthly payment, making it easier to stay on top of your financial obligations.

Frequently Asked Questions On Drive Out Of Debt: Can I Keep My Car If I File Chapter 13?

Can I Keep My Car If I File Chapter 13?

If you file Chapter 13, you can keep your car as long as you continue to make payments according to the court-approved plan.

Will Filing Chapter 13 Protect My Car From Repossession?

Yes, filing Chapter 13 can protect your car from repossession by providing you with an opportunity to catch up on missed payments.

Can I Include My Car Loan In Chapter 13?

Yes, you can include your car loan in Chapter 13, allowing you to restructure the payments and potentially reduce the interest rate.

How Long Does Chapter 13 Last?

Chapter 13 usually lasts between three to five years, during which you’ll be able to repay your debts according to the court-approved plan.


If you file for Chapter 13 bankruptcy, you typically have a good chance of keeping your car. As long as you meet the necessary criteria, including being current on payments and developing an affordable repayment plan, you can continue to use your vehicle while reorganizing your finances and repaying your debts. However, it’s crucial to consult with a bankruptcy attorney to navigate the complexities of the process and ensure the best outcome for your situation.

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