<\/span><\/h2>\nIf you are considering bankruptcy, you may wonder what will happen to your car. The answer to this question mainly depends on whether you file for Chapter 7 or Chapter 13 bankruptcy.<\/p>\n
Chapter 7 Bankruptcy:<\/b> Under Chapter 7 bankruptcy, also known as liquidation bankruptcy, non-exempt assets may be sold to repay creditors. However, most states provide exemptions for essential items, including vehicles. If your car’s equity is within the exemption limit, you can likely keep it during the bankruptcy process. If the equity exceeds the exemption limit, the trustee may sell the car, give you the exemption amount, and use the rest to repay creditors. Alternatively, you may be able to negotiate with the trustee to keep the car by paying its fair market value.<\/p>\n
Chapter 13 Bankruptcy:<\/b> Chapter 13 bankruptcy involves creating a repayment plan to satisfy your debts over a period of three to five years. In this type of bankruptcy, you can usually keep your car if it is necessary for work or fulfilling basic needs. However, you will need to include the car payments in your repayment plan.<\/p>\n