Will I lose my car in a Chapter 7 bankruptcy?

Not unless you want to! It is unusual for someone to lose a car or any other property that they do not want to lose in a bankruptcy case.  It’s common for people to file bankruptcy in order to get rid of a vehicle.  They lose it because they want to lose it. The payments may be too high or the vehicle is simply not worth keeping due to the current condition and/or when comparing the current condition to the amount still owed on that vehicle.   For example, your car is worth $5,000 but you owe $10,000 because of interest, high mileage, and/or other current issues with the vehicle that has decimated the value.

But if you want to keep your vehicle and other debts are the issue needing to be addressed, as long as you are current on your car payments, the finance company will not repossess your car as a result of filing bankruptcy.  The creditor (finance company) will send you a Reaffirmation Agreement that outlines your current loan (amount owed/monthly note amount, etc) and you will sign the Reaffirmation Agreement to keep the vehicle. It goes through the bankruptcy untouched.

The finance company wants you to keep the vehicle and pay for it.  They really don’t want it back – that’s why many people end up filing a chapter 7 bankruptcy to force them to take the vehicle back and to wipe out the responsibility of any further debt related to that vehicle.

If you want to keep your vehicle but you are not current on the note and cannot catch the note up anytime soon, then a Chapter 13 bankruptcy might be the better option to utilize to keep your vehicle.