Will I lose my car in bankruptcy?
CAquietsail1 month ago
I owe $9,000 on a car worth maybe $11,000. Will the trustee take it in a Chapter 7?
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✓ Verified answer from a licensed attorney — shown first
Probably not. Two pieces. (1) Equity protection: your state's motor-vehicle exemption protects some amount of equity (varies widely — CA's CCP §703 vehicle exemption is around $3,625, but the wildcard exemption can add more; many states have higher dedicated vehicle exemptions). With $2k equity ($11k - $9k loan) you're likely fully exempt. (2) Loan handling: if you're current on the payments, you can typically 'reaffirm' the loan and keep paying the lender as if no bankruptcy happened — you keep the car. Most consumer Ch 7 filers keep their vehicles. The case where someone loses a car is usually a paid-off car worth far more than the exemption.
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