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Can you file bankruptcy on a car loan?
I’m having trouble paying my car loan, but I pay my other bills and debts regularly. A friend told me that filing for bankruptcy would wipe out my car loan obligation, but I can still keep the car. Is that true? Can I file bankruptcy on a car loan and keep the car?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Sorry to hear that you can’t keep up with your
car loan
payments. You can file bankruptcy on a car loan, but filing will also include all of your other debts, not just the car loan.When you file for bankruptcy, you have two options:
- Chapter 7, which is usually for people who can’t repay their debts.
- Chapter 13, which is a reorganization of how the debt is paid.
Because you’re able to pay your other debts, you should file for Chapter 13 after consulting a bankruptcy lawyer.
During Chapter 13 bankruptcy proceedings, a court-appointed trustee will sort out your repayment plan with the lender. Typically, this means you have three to five years to repay the car loan. So even if you’re behind on payments, you can keep the car if you continue to make payments under the new repayment plan.
If you want to free up some cash to put toward your car loan reorganization and repayment, make sure to review your car insurance and compare quotes on the Jerry app.
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Jerry
helps you find rates from dozens of car insurance providers in just minutes. If you find a better rate, Jerry can help you buy your new coverage and even cancel your old policy!View full answer
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