PriceProtect™
DriveShield™
GarageGuard™
Services
Insurance
Car Insurance
Compare Car Insurance with Jerry
Jerry’s Expert Advice
Car Insurance Estimates
Home & Renters Insurance
Renters Insurance
Repairs
Car Repair Estimates
Repair Estimates for Popular Services
Advice
Read Car Content
Browse Jerry Car Advice
Check Out Expert Car QnA
Learn About How We Create Content
Jerry Data & Research
What happens to my car loan if I declare bankruptcy?
My finances are a mess and I think bankruptcy is my only option. What will happen to my financed car?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“If you have a car loan and file for bankruptcy, one of two things may happen. In the event that you can’t keep up with the payments, you’ll have to return the vehicle. But due to bankruptcy protection, you’ll be absolved of the remaining balance of the loan.
Keep in mind that you’ll need to make arrangements to give the car back to the lender. Otherwise, they’ll send someone to your house to repossess it.
Conversely, if you want to keep the vehicle, you can do that as well, provided that you have the financial means to do so. In Chapter 13 bankruptcy, you must show that you can pay off the balance in the next three years, courtesy of a Chapter 13 repayment plan.
If you file for Chapter 7 bankruptcy, you can keep your vehicle if you’re current on payments, thanks to the law’s motor vehicle exemption. Note that you’ll probably have to sign a reaffirmation agreement, but that’s a normal procedure under Chapter 7 bankruptcy laws.
“
View full answer
- Gregory R.
WHY YOU CAN TRUST JERRY
Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
Join 4M+ members in lowering their car insurance
You Might Also Be Interested
Read Advice From Car Experts At Jerry
What Others Are Asking
Browse More Content
Insurance in Your State
Easiest way to compare and buy car insurance
No long forms
No spam or unwanted phone calls
Quotes from top insurance companies