Can I Keep My Car If I File Bankruptcy?

Attorney David Shuster | 888-365-0921 | Schedule Your Consult Today

"[For bankruptcy laws regarding cars], each state is different. In Texas, you’re entitled to keep a car for every licensed driver that’s in your home. Even if you’re the titled owner for your car—your wife’s car, your children’s car—as long as there’s a licensed driver for them, you can own them outright and keep them."

It's a common concern for people in debt: can I keep my car if I file for bankruptcy? What if I'm behind on my auto payments? Will I lose my car if I file for bankruptcy?

David Shuster is a debt relief attorney with Shuster Law, PLLC in the Dallas—Fort Worth area. In this video, he explains all the possible scenarios for what could happen to your cars if you file for bankruptcy.

To learn more, contact the attorney directly by calling 888-365-0921 or by submitting a contact form on this page.

Key Takeaways From David Shuster:

Many automobiles rules in bankruptcy cases vary on a case by case basis, so you should be aware of what applies to your state laws and your specific situation.

If you own multiple cars, Shuster says, repossessions will vary according to the situation. Factors such as the car’s age, its worth, and its make and model are taken into consideration. Unless you have a car that is worth over $5,000 dollars, there are likely exemptions you can take that will allow you to keep your car or multiple cars in your home.

Even if you still have payments left to make on your car, you can likely keep it unless it was repossessed prior to your filing for bankruptcy. In Chapter 7 bankruptcy, you generally have a 90 day stay to get any financial affairs in order and meet a creditor’s terms before they come and take your car. Also, in a Chapter 7 bankruptcy situation, those who are repossessing your car will have to ask the court for permission to do so. It is highly unlikely that your car would be repossessed without your knowledge or understanding of the situation. Your attorney can help you in this situation.

You are responsible for back payments on your car.

Even though you may be entitled to keep your car for a period of time while figuring out how to meet creditors’ terms, filing for bankruptcy does not mean that you don’t have to worry about paying off the debt on that car. You may be in a situation where you can remedy your debt crisis and begin making payments fairly quickly, or you make spend a greater amount of time ensuring that you are applying your financial power to the right areas. If you are unable to make your payments, it could be wiser to sell the car—if you own it outright—or allow it to be repossessed in order to begin to decrease your debts and put you back on the path to financial solvency.

Reaffirmation is generally not a necessary step.

When you file for bankruptcy, your payment records will generally be zeroed out and reflect zeroes though your balances, says Shuster. Reaffirmation means that your recorded payments will still show up in your records, and you will be expected to make those payments. For example, if you have a car and reaffirm your debt, your records would show details of your past car payments and the amount you are expected—and will need—to keep paying in order to keep your vehicle.

If you cannot make the payments, says Shuster, it is better to not reaffirm your debt and allow your statements to stay zeroed out and not tied to a payment schedule. The more you are able to minimize outstanding payments—even if it means selling or giving up possessions—the faster you will be able to climb out of bankruptcy and rebuild your financials.

To learn more, contact the attorney directly by calling 888-365-0921 or by submitting a contact form on this page.

Disclaimer: This video is for informational purposes only. In some states, this video may be deemed Attorney Advertising. The choice of lawyer is an important decision that should not be based solely on advertisements.


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