For most of us, our vehicles are critical to the way we live our lives. We rely on our cars to get to work, get the kids to school, to buy groceries, and for enjoyment like day trips to Skidaway Island State Park. If you’re exploring how bankruptcy can help you get out of debt, then you may be worried about what will happen to your car.

Most people who file for bankruptcy can protect their car through the bankruptcy process, and choose to keep their car. Let’s explore the following options:

  • Keeping your car when you do not have a car loan.
  • Keeping your car when you have a car loan.
  • Surrendering your car.

Each option depends on the specifics of your case. We’ll explore your options and which is best for you during your free consultation.

If you have missed one or more monthly car payments, click here to read our article “Is Your Car About To Be Repossessed Because You Missed Your Car Payment?

Keeping Your Vehicle (Without A Loan)

If you own your car outright, you have the option of keeping it as long as you can exempt it in your bankruptcy. Property that is “exempt” means it is protected through bankruptcy and you get to keep it, as long as the item’s fair market value does not exceed a certain dollar amount.

In Georgia, you can exempt up to $5,000 in one or more motor vehicles. This includes your cars, trucks, motorcycles, or other motor vehicles.

If your motor vehicles are valued at more than $5,000, you may still be able to protect them under Georgia’s “wildcard” exemption that allows an additional exemption of 1,200 on any belonging. Also, if you are married and filing jointly with your spouse in Georgia, you may double the Motor Vehicle Exemption and protect up to $10,000 of equity in vehicles.

Learn more about Georgia exemptions and protecting your other property and belongings in bankruptcy here.

Keeping Your Vehicle (With A Loan)

Generally, if you can afford your monthly payments and you do not have more equity that can be protected, then you can keep your car.

Keeping a car with a loan through bankruptcy is quite common, but of course, these options depend heavily on the specifics of your case. During and after bankruptcy you must continue to make your monthly car payments. Car loans are secured debt, meaning the loan is attached to the car as collateral. If you do not make your payments, the lender will have the right to repossess your car.

A caveat to this option is that if you want to ensure your vehicle will not be repossessed, the U.S. Bankruptcy Code requires you to “reaffirm” your loan during bankruptcy. This means that you sign paperwork that reaffirms the terms of the loan. There are other implications of reaffirmation agreements as well, which we will go over during our free consultation.

When you work with us, we will make sure that you understand what your options are in regard to your vehicles, and if you will be able to keep them through the bankruptcy process.

Surrendering Your Vehicle

There are a few reasons a person may surrender their vehicle in bankruptcy. If the equity in your vehicle is higher than what can be protected, then the vehicle can be sold by the bankruptcy trustee and the proceeds paid out to your creditors.

Another reason to surrender your vehicle is as a wise financial decision. If your vehicle is underwater (you owe more than it is worth), or has a high monthly payment you cannot afford, you have the option to surrender the car in bankruptcy. This option allows you to erase the debt, and the lender will not be able to come after you for a deficiency between the amount the car sells for and the amount you owe.

Contact us to discuss what will happen to your car or other motor vehicles if you file for bankruptcy. The Law Office of Barbara B. Braziel offers free consultations to people in the Savannah, GA area and the surrounding counties including Chatham County, Effingham County, Bulloch County, Bryan County, Liberty County, Long County.


We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.

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