Keeping Your Car in Bankruptcy

Are you struggling to make payments on your current auto loan while also struggling with other debt and wondering if you might be able to keep your car if you file for bankruptcy? Or are you concerned about being able to keep the vehicle you have paid off if you file for consumer bankruptcy? There are a couple of key ways that you can keep your car if you file for personal bankruptcy, which may be particularly important for the thousands of consumers struggling with auto loan payments.

Indeed, according to a recent article in The New York Times, consumers in Florida and across the country are struggling with auto loan payments on top of other types of debt. Our West Palm Beach bankruptcy lawyers can tell you more about recent auto loan difficulties and how bankruptcy might be able to help you.

Understanding Consumer Struggles with Auto Loan Payments

Consumers with varying income backgrounds and credit scores are struggling with the high costs of auto loan payments. As the report in The New York Times clarifies, “higher car prices combined with higher interest rates have driven monthly payments upward and have put pressure on consumers across the income and credit score spectrum.” While debtors who have more limited incomes and lower credit scores tend to be struggling even more, the report emphasizes that “borrowers with higher credit scores are also showing evidence of strain.”

By the end of September 2025, about 2 percent of all auto loans across the country were “significantly overdue,” and more had reached the point of being “overdue” by at least a month or more. If you are in a situation where you are struggling to pay your auto loan or struggling with other types of debt, should you consider bankruptcy?

Bankruptcy and Your Car

If you currently have an auto loan payment and want to find a way to catch up with the creditor while also reorganizing your debt, Chapter 13 bankruptcy could be a solution for you. In this type of bankruptcy, no assets are liquidated, and secured creditors do not repossess collateral (such as your car if you have an auto loan with a secured creditor) because this type of bankruptcy allows you to catch up on past-due debt with your creditors. Not only can you catch up on your auto loan and keep your car, but you can also catch up on other debts with a Chapter 13 filing, including your mortgage. Chapter 13 is especially common among debtors at risk of foreclosure because this type of bankruptcy can stop foreclosure and allow you to catch up on mortgage debt to become current with the lender.

For those who are considering a liquidation bankruptcy under Chapter 7, a car for which you still have a loan payment (a secured debt), if you are behind on payments, you will likely be unable to keep the vehicle. However, if you are struggling with other debts but are current with your auto loan, you may be able to reaffirm the debt with the lender. If you own your car outright, if you have paid off the loan, you may be able to keep your car even in a liquidation bankruptcy. Florida’s bankruptcy exemptions allow debtors to “exempt” or keep a wide range of assets in a Chapter 7 case. Under Florida law, you can exempt up to $5,000 of equity in your motor vehicle. If you are married and filing jointly, the exemption will increase.

Contact Our West Palm Beach Bankruptcy Attorneys Today

To find out more about motor vehicles and consumer bankruptcy, contact our experienced West Palm Beach bankruptcy lawyer at Kelley Kaplan Delaney & Eller, PLLC, today.

Sources:

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0200-0299/0222/0222.html

nytimes.com/2025/10/20/business/car-loans-missed-payments.html