Can I Keep My Car If I File for Bankruptcy?
One of the most common concerns people have when considering bankruptcy is whether they’ll lose their car. For many, a vehicle is essential for work, family, and daily life. The good news is: you may not have to give up your car when filing for bankruptcy.
What Happens to Your Car in Chapter 7 Bankruptcy?
In Chapter 7, assets can be liquidated to pay creditors, but bankruptcy exemptions may allow you to keep your car. In North Carolina, you can exempt:
- Up to $3,500 of equity in one motor vehicle (as of current exemption laws)
If you still owe money on your car loan and are current on payments, you may be able to:
- Reaffirm the loan, agreeing to continue payments to keep the car
- Redeem the car by paying its current value in full
- Or surrender it if the payment is no longer affordable
What About Chapter 13 Bankruptcy?
Chapter 13 lets you catch up on missed car payments through a 3–5 year repayment plan. It may also allow you to:
- Lower the interest rate
- Reduce the loan balance if the car is worth less than what you owe (known as a “cramdown,” if eligibility is met)
This can be a powerful option for keeping your car while resolving your overall debt.
What If You Have More Than One Vehicle?
Only one vehicle is protected under the exemption limit. If you own multiple cars or have significant equity, it’s best to speak with an attorney to understand how your assets will be treated.
Get Clarity Before You File
Filing for bankruptcy doesn’t automatically mean giving up everything you own. With the right legal guidance, many people are able to keep their car and other essential assets while getting relief from overwhelming debt.
If you’re considering bankruptcy and want to understand your options, reach out to Attorney Greg Kornegay for a free consultation.
What Our Clients Say:
Member:
Attorney Gregory Kornegay
Greg is a trial attorney in Wilmington with over 30 years of experience. Greg was born and raised in southeastern North Carolina. Before law school he managed a store with employees making a payroll every week. His first job out of law school was as an Assistant District Attorney investigating and trying cases for the State of North Carolina. Through the years he has handled many different types of cases – including death penalty cases.
Being married with children has been a blessing and a challenge, but has served him well in understanding the problems individuals and families face as they live out their lives. Greg believes that each case is different and the needs of each client are unique, but there are certain themes of life that we all share.
