Keeping Your Car During Bankruptcy

Many people find that filing bankruptcy is the only way out from under a pile of debt. People who have been laid off and have not been able to find other employment and people who lost their jobs due to a health concern commonly file bankruptcy. Because of the poor job outlook, more people are filing bankruptcy.

Chapter 7 bankruptcy is a liquidation of assets. The debtor is allowed to keep certain assets including a car up to a certain value. Some debt, such as student loans, domestic payments (child support and alimony) and debt owed because of a settlement for drunk driving cannot be discharged.

Chapter 13 bankruptcy is a reorganization of debt. The debtor is allowed to keep certain assets including a car up to a certain value. Some debt, such as domestic payments (child support and alimony), certain settlement debt and student loans cannot be discharged.


When filing bankruptcy, there are certain things you can keep, including one car worth up to a certain value. Items that are exempt include:

• Motor vehicles, up to a certain value
• Reasonably necessary clothing
• Reasonably necessary household goods and furnishings
• Household appliances
• Jewelry, up to a certain value
• Pensions
• A portion of the equity in the debtor’s home
• Tools of the debtor’s trade or profession, up to a certain value
• A portion of unpaid but earned wages
• Public benefits, including public assistance (welfare), social security and unemployment compensation, accumulated in a bank account
• Damages awarded for personal injury


Once bankruptcy is filed, an automatic stay is put on the debtor’s estate. Creditors can no longer contact the debtor for the purposes of bill payment. If the debtor is representing him or herself in the bankruptcy, creditors may contact him or her for court related matters only.

Because the process of bankruptcy can be complicated, a debtor should contact a Maryland or Washington DC bankruptcy attorney for help in determining which chapter he or she should file under. An experienced bankruptcy attorney can smooth the process, making it less stressful for the debtor. Also, an attorney can make sure the debtor keeps one running vehicle after the bankruptcy is filed (as long as the debtor’s car payments are current) and the debtor will no longer have to deal with creditors.

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