Can I Keep My Car if I File Bankruptcy?

When filing for Chapter 7 bankruptcy, many clients wonder if they can keep their cars. The answer depends on various factors, such as the value of the vehicle and whether or not you owe money on it. The best first step to take is to determine how much your car is worth and how much you owe on it. A good resource to provide a estimate on the car is Kelley Blue Book. Alternatively, most car dealerships are able to give an estimate of the car's value.

In Florida, you are entitled to an exemption of up to $1,000 of equity in your car. If your car has more value than that, the bankruptcy trustee may require you to buy back the equity in order to keep the vehicle. However, if the filer does not use the Homestead Exemption, which is typically for non-homeowners, they may be entitled to a $4,000 personal property exemption. This exemption is often used to protect clothing, furniture, electronics, and other property. But, if some of this exemption is not used, it can be applied to the equity in your car.

If you are current on your auto loan, you can likely sign a Reaffirmation Agreement. This agreement takes the auto loan out of bankruptcy and requires you to continue making payments. If you are behind on your car loan, the bank will likely repossess the vehicle. If you owe signifigantly more money than the car is worth, it may be in your best interest to surrender the car during bankruptcy. Bankruptcy works to discharge any deficiency that may result.

It's important to note that if you choose not to sign a Reaffirmation Agreement, or if the judge refuses to approve it, the lender may still repossess the car. It's crucial to speak with an experienced attorney to understand your options and navigate the complexities of car ownership during bankruptcy.

If you are considering filing bankruptcy in Pensacola, Milton, Gulf Breeze, Pace, Niceville, Crestview, Defuniak Springs, or Panama City Beach, call William T. Shaffer at (850)398-5187 for a free consultation to discuss your specific situation. He can help you understand your rights and options when it comes to keeping your car during Chapter 7 bankruptcy.