Chapter 7 · Beverly Hills
Can I Keep My Car in Chapter 7?
Yes, most people can keep their car in Chapter 7. It depends on how much equity you have, the California vehicle exemption and whether you are current on any car loan. Call (310) 362-9071 and we will run the numbers on your car at a free consultation.
- Equity is the car's value minus what you owe on it.
- California's vehicle exemption protects equity up to a set amount.
- With a loan, you must also decide to reaffirm, redeem or surrender.
At a glance
How equity decides if you keep your car in Chapter 7
Whether you can keep your car in Chapter 7 comes down to equity. Equity is what the car would sell for minus what you still owe on it.
The Chapter 7 trustee can sell property that is not protected and pay creditors with the money. California lets you protect equity in your car with an exemption. Under both exemption systems, the vehicle exemption is $8,625, for amounts effective April 1, 2025. See our page on the California motor vehicle exemption.
If your equity is at or below your exemption, the trustee has nothing to gain by selling. You keep the car. If your equity is higher, the trustee may sell it, pay you your exemption in cash and give the rest to creditors. Sale costs also count. A trustee usually will not sell a car when little would be left after paying the loan, your exemption and the cost of the sale.
Equity math example. These are made-up numbers to show the math.
| Step | Amount |
|---|---|
| What the car would sell for today | $15,000 |
| Minus your loan balance | $9,000 |
| Equal: your equity | $6,000 |
| Vehicle exemption (April 1, 2025 amount) | $8,625 |
| Equity left unprotected | $0 |
In this example, all of the equity is protected. The trustee has no reason to take the car.
Paid-off car vs financed car
Paid-off car. With no loan, your equity is the full value of the car. If the car is worth more than the vehicle exemption, you may be able to add other exemptions. Under System 2, the wildcard is $1,950 plus any part of the $36,750 homestead amount you do not use, for a total of up to $38,700 (April 1, 2025 amounts). Renters and people with little home equity often use it this way. Our page on the California wildcard exemption explains more, and System 1 vs System 2 shows how to pick.
Financed car. With a loan, your equity is often small or zero, so the exemption covers it. But protecting the equity is only half the question. The lender still has a lien on the car. If you want to keep it, you must keep paying and deal with the loan in one of the ways below.
A second car. The vehicle exemption is one amount for all your vehicles together, not one per car. A second car with real equity may need the wildcard, or it may be at risk. A second car with a loan and little equity is often safe.
Your options with a car loan in Chapter 7
If you owe money on your car, you tell the court what you plan to do on a form called the statement of intention. You then have to follow through, usually within 30 days after the first date set for your 341 meeting.
- Reaffirm the loan. You sign a new agreement to stay liable on the loan. You keep the car and keep paying. If you fall behind later, the lender can take the car and sue you for the balance. The court may review whether you can afford it. See reaffirmation agreements.
- Redeem the car. You pay the lender what the car is worth now, in one lump sum, and own it free and clear. This helps when you owe much more than the car is worth. See Chapter 7 vehicle redemption.
- Surrender the car. You give the car back. Any balance owed after the lender sells it is usually wiped out in your discharge.
- Keep paying without reaffirming. Some lenders let you keep the car if you stay current, even without a reaffirmation. This is sometimes called "ride-through." It carries risk. After the case, the lender may have the right to repossess even if you are current. We check your contract and lender before you rely on it.
If you are behind on your car loan and want to catch up over time, Chapter 13 may fit better. See Chapter 13 car loan cramdown and car repossession help.
Common mistakes with your car in Chapter 7
- Guessing the car's value. Use a fair private-sale value and note dents, miles and repairs. The trustee may check.
- Missing the statement of intention deadline. If you do not act in time, the protection of the automatic stay can end for the car.
- Reaffirming a bad loan. If you owe far more than the car is worth, reaffirming can leave you stuck with the debt after bankruptcy.
- Letting your insurance lapse. Most car loans require insurance, and a lapse can count as a default.
- Selling or transferring the car to a relative before filing. This can be undone by the trustee and can hurt your case.
For the bigger picture, return to Chapter 7 bankruptcy.
What it costs
- Chapter 7: flat attorney fee from $1,200, plus the $338 court filing fee
- Chapter 13: attorney fee quoted in writing, and part of it can be paid through the plan
- Payment plans are available, and the first consultation is free
More on Chapter 7 bankruptcy
- Chapter 7 bankruptcy in Beverly Hills
- California Median Income Figures for the Means Test
- What Debts Are Wiped Out in Chapter 7
- Debts Chapter 7 Will Not Discharge
- Can I Keep My Car in Chapter 7?
- Can I Keep My House in Chapter 7?
- The Chapter 7 Timeline, From Filing to Discharge
- What the Chapter 7 Trustee Looks For
- Filing Chapter 7 With No Income or Between Jobs
- Filing a Second Chapter 7: The Eight-Year Rule
- Chapter 7 for Married Couples: Filing Alone or Together
- What Happens at the 341 Meeting of Creditors
- Redeeming a Car in Chapter 7
- Means test evaluation
- Reaffirmation agreements
Car questions in Chapter 7
Can I keep my car in Chapter 7 if it is paid off?
Yes, you can usually keep a paid-off car in Chapter 7 if its value is within your exemptions. The vehicle exemption is $8,625 under either system (April 1, 2025 amount). Under System 2, the wildcard can protect more.
Can I keep my car in Chapter 7 if I am behind on payments?
You can keep your car in Chapter 7 when you are behind only if you can catch up with the lender quickly or redeem the car. Chapter 7 does not give you time to pay back missed payments. Chapter 13 does.
Do I have to reaffirm my car loan to keep my car?
No, you do not always have to reaffirm your car loan to keep your car. You can also redeem it, and some lenders let you keep paying without reaffirming. Each choice has trade-offs that we explain before you decide.
What happens to a leased car in Chapter 7?
A leased car in Chapter 7 can usually be kept if you assume the lease and stay current, or returned if you do not want it. If you return it, money owed under the lease is usually discharged.
Free consultation
Find out if your car is safe
Call (310) 362-9071 or send the form. Bring your loan statement and we will check your car's equity and options for free.
Law Offices of John Asuncion9454 Wilshire Blvd., Penthouse Floor
Beverly Hills, CA 90212
(310) 362-9071
Monday to Friday, 9 a.m. to 6 p.m.