How Can You Keep Your Car When You File For Bankruptcy?

Cars are an important part of people’s everyday life. Some may use it to get to work, while others need it to run errands. That’s why keeping a vehicle is something to think about when filing for bankruptcy

While Chapter 7 bankruptcy involves selling some assets to pay off debts, does it also lead to the loss of cars? Read more to learn what filing for bankruptcy does to a debtor’s vehicle and how a bankruptcy lawyer can help.

Filing For Bankruptcy

Bankruptcy is a process that helps relieves individuals and businesses of debt. But it’s important to know that there are a few things at stake. It may be your home, your vehicle, or other important assets that you have. You should consider your car when filing for bankruptcy, especially if you use it for important matters such as work and essential errands.Know Everything You Need To Successfully Start Your Bankruptcy Case Without Missing Any Legal Details

Keeping Your Car In Chapter 7 Bankruptcy

Texas law allows you to keep your car, even after filing for Chapter 7 Bankruptcy through exemptions. Take note that the protection of motor vehicles applies to one car per licensed family member.

Federal law states that you can have a car exempted up to $3,775. On the other hand, Texas law protects the entire value of one car per family member. 

State Exemptions

When you file Chapter 7 bankruptcy in Texas, everything you own is placed into what is called the bankruptcy estate. You then have exemptions, which allow you to protect your property in bankruptcy. 

In addition to cars and motorbikes, Texans can exempt sporting equipment, including firearms and bicycles. Your home furnishings which include heirlooms, clothes, and jewelry are also part of the exemption. Pensions are often exempt as well as most life insurance policies. 

Keeping Your Car In Chapter 13 Bankruptcy

Discover Which Assets Can Stay With You When You Start A U.S. Bankruptcy ChapterChapter 13 bankruptcy works for people who have enough income to pay some of their debts. Debts are discharged upon completion of the Chapter 13 repayment plan, which usually lasts three to five years.

In Chapter 13, you can keep your property. If all your assets are exempt, you get to keep them without penalty. If it is non-exempt, then you pay your creditors for it in your payment plan with your disposable income—the amount of income left after you have covered allowed expenses for living costs.

Chapter 13 allows an individual to catch up on any debt payments, such as car loans, and spread the missed payments over a period of three to five years. This stops your creditor from repossessing your car during the repayment period. Once you complete the repayment plan, you will be up to date with your payments.

If you don’t continue making these payments, the creditor can apply for a “lift of stay” and repossess the vehicle. When the creditor files for a lift of stay, they can take action so that they can continue to collect what the debtor owes them. This is filed against an “automatic stay,” which prevents creditors from initiating lawsuits and methods to demand payments. 

Have A Bankruptcy Lawyer Assist You

Keeping your vehicle is important if you depend on it every day. While filing for bankruptcy entails the risk of losing it, a bankruptcy attorney can help prevent this. Lincoln-Goldfinch Law offers bankruptcy advice on keeping your car. Whether you’re filing for Chapter 7 or Chapter 13, the firm assists you and helps you determine which assets you can keep. Consult with Lincoln-Goldfinch Law when filing for bankruptcy.


Even when filing for Chapter 7 bankruptcy, you can still keep your car through exemptions. Chapter 13 may be a better option if you have disposable income since you get to maintain your car payments as part of your repayment plan. To know more about how you can keep your assets during bankruptcy, consult with an experienced bankruptcy lawyer.

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