- July 1, 2022
When you’re overwhelmed with debt and considering bankruptcy, you probably have a lot of financial questions. One of these may be, “Can you file bankruptcy and keep your car?” That’s a good question. Read on to find out the answer.
Federal and state bankruptcy exemptions are designed to help you protect some property (like a car or house) when you are going through the bankruptcy process. In Indiana, most people can protect some assets through exemptions, depending on their level of income, what they own, and which bankruptcy chapter they file under. Some individuals can exempt everything they own, while other people may need to sell some assets to pay creditors.
In most cases, you can exempt important items you need to maintain a household and job. You must use form Schedule C: The Property You Claim as Exempt to list essential items and file the form with your bankruptcy petition, along with supporting documentation. Your bankruptcy lawyer can help you do this. Such items include some equity in a vehicle, clothing, furniture, kitchen items, bedding and other essentials.
- Motor Vehicle Exemption
Indiana does not have a vehicle exemption, per se, but you can use the state’s “wildcard exemption” to protect equity in your car, truck, or SUV.
- Wildcard Exemption
As of March 1, 2022, you can protect any real estate that you do not live in full-time (a vacation home, lake house, etc.) or other property (a car or truck, for example) up to a value of $12,100 with the wildcard exemption. (Ind. Code § 34-55-10-2(c)(2). You also can protect up to $450 of intangible personal property. (Ind. Code § 34-55-10-2(c)(3).) The Indiana Department of Financial Institutions updates the exemption amounts every six years, so it’s worth checking with the state agency when you’re ready to file.
If you’re worried about keeping your vehicle when filing bankruptcy, the best thing to do is talk to affordable Indiana bankruptcy attorney Jerry E. Smith. He has helped countless people walk through bankruptcy and get a fresh start. He and his staff are compassionate and helpful, and they understand that debt can be a terrible burden. For a free initial consultation, call Jerry at (317) 917-8680.
Get hope. Get help. Get peace of mind.
Can I Keep My Car If I File Chapter 7?
Chapter 7 is often called “liquidation bankruptcy”. This means that you sell items to help pay creditors, and your remaining unsecured debts are typically discharged. In some cases, when a person has almost no assets, nearly all their debts are eliminated through bankruptcy. Chapter 7 typically takes only a few months to complete.
Regarding your car, you can usually keep your vehicle in Chapter 7 because you are protected by Indiana’s wildcat exemption. However, if the equity you own in your vehicle is more than the wildcat amount ($12,100), the court may require you to sell the vehicle to pay creditors.
Chapter 7 has a bankruptcy means test. In 2005, the law was changed to include a “means test” to try to screen out people who may abuse the system. If your monthly income is greater than Indiana’s median, you must pass this test to determine if your filing is considered abusive. Chapter 7 is codified at 11 U.S.C. §§ 101(41), 109(b).
Can I Keep My Car If I File Chapter 13?
Chapter 13 is often called “reorganization bankruptcy.” To help you decide if Chapter 13 bankruptcy is right for you, evaluate the total value of your debts. Generally, anyone is eligible for Chapter 13 relief if their unsecured debts are less than $419,275 and secured debts (debts in which you agree property can be used as collateral) are less than $1,257,850. (Amounts are subject to change. Talk to our attorney to get the most current information.) Chapter 13 is codified at 11 U.S.C. § 1322(d).
Regarding your car, Chapter 13 offers some options that may be helpful. If you’re behind on your car payments, a Chapter 13 can help you catch up. Or, if you owe more on the car loan than the vehicle is worth, a Chapter 13 may give you the chance to reduce what you owe. There are some situations in which you might be prevented from keeping your car in a Chapter 13. These include:
- your car payment is very high,
- you’re paying for a second vehicle that you don’t need, or
- you have a lot of non-exempt car equity over and above the $12,100 wildcard exemption.
Under a Chapter 13, you will create a 3- to 5-year court-approved repayment plan wherein you’ll repay creditors some of your outstanding debts, often under more favorable terms. After you have completed the repayment plan, some of your unsecured debts may be discharged.
Can I Keep My Car If I File Chapter 11?
Chapter 11 bankruptcy is typically used for corporations and partnerships. It’s a reorganization bankruptcy that allows businesses to get their financial house in order so they can continue to operate and repay creditors over time. If corporations or partnerships own company cars, this will factor into the bankruptcy trustee’s evaluation of assets and liabilities. The best way to find out if you can file Chapter 11 and keep your vehicle is to speak to a skilled and experienced Indiana bankruptcy attorney.
Can I Keep My Car Loan If I File Bankruptcy?
If you exempt the equity in your vehicle and continue to make car payments on time, then you can keep your car loan if you file bankruptcy. You simply reaffirm the loan as part of your bankruptcy proceeding and continue to make monthly payments.
Contact Attorney Jerry E. Smith Today
If you are burdened with overwhelming debt and don’t know what to do, an affordable bankruptcy may be the first step toward a better future. You do not have to feel stressed or embarrassed when reaching out to our law firm. We are compassionate and understanding. Attorney Jerry E. Smith has helped countless clients file affordable bankruptcy and get a fresh start. Smith Law Firm offers weekend and evening appointments as well as same day filings if possible. To find out more about our affordable legal services, call us at (317) 917-8680. The initial consultation is free.