Protecting Your Assets: How to Keep Your Car When You File for Bankruptcy

The question, “Can I keep my car if I file for bankruptcy?” is common among individuals considering filing. For many, their vehicle is the only way to get to and from their jobs that assist them in paying their debts. If you are finding yourself in this situation, you are not alone.

Keep reading to learn about the bankruptcy filing processes and ways you can help protect one of your most valuable assets of life.

Types of Bankruptcy

It’s critical to know about the two types of bankruptcy filing for individuals to fully comprehend whether or not a piece of your property, such as a car, is at stake when filing bankruptcy.

The first and most common type of bankruptcy filing for individuals is Chapter 7. According to, 225,455 people filed for Chapter 7 Bankruptcy in 2022. When you file for Chapter 7, your non-exempt assets will be sold to help pay off your creditors and free you of your debts. This chapter of bankruptcy filing is suitable if you have limited financial means.

Another type of personal bankruptcy filing is Chapter 13. This chapter of filing helps you create a three to five-year repayment plan to pay back the creditors, as opposed to liquidating debt through the sale of your assets. This chapter of bankruptcy filing is more suitable if you have the means to have consolidated monthly payments.

Both types of personal bankruptcy filing help you achieve a new sense of financial peace and start anew.

Bankruptcy Exemptions

You will be happy to know that when filing for bankruptcy, it doesn’t mean you have to lose assets that are important to you and your life. That is thanks to exemptions offered in the filing process that protect valuable assets.

However, these bankruptcy asset exemptions can vary by state. In the state of Maryland, there is no motor vehicle exemption. However, not all hope is lost if you wish to keep your vehicle throughout bankruptcy. You can utilize the wildcard exemption, or you can choose another option under Chapter 13 filing.

The wildcard exemption in Maryland covers up to $5000 worth of personal property, including your car. That means that, for example, if you own a vehicle that is worth $8,000 and have a car loan balance of $4000, you have $4000 of equity in your vehicle, which is covered under the exemption limit. When an asset falls within the exemption limits, your equity can be exempted, and you can keep the vehicle as long as you continue to make your payments on time.

With Chapter 13 filing, you have the option to pay the non-exempt value of your car to creditors and keep your vehicle. A bankruptcy lawyer can help you navigate the filing process, including the option of paying the non-exempt value of your vehicle, and help determine if that is the correct choice for you.

Reaffirmation Agreements

Another option that can help you maintain ownership of your vehicle through bankruptcy is a reaffirmation agreement. A reaffirmation agreement allows you to make an agreement with your creditor that you pay all or a portion of the debt despite filing for bankruptcy. In short, this process waives the discharging of debt in the bankruptcy process.

Consult with a Bankruptcy Professional

For some, surrendering their vehicle in the bankruptcy process is the wisest choice, but for others, maintaining their vehicle is a must. Going through this process alone can be daunting, and understanding your rights and the options available to you can seem impossible. That is why you should consult with Adam M. Frieman, a Baltimore-based bankruptcy lawyer.

Mr. Frieman is a skilled lawyer with over 25 years of experience in law. He will work with you to explore your options and help you navigate the bankruptcy process, so you can achieve a future of financial peace.

To learn more about the bankruptcy filing process and find the best options for you, contact our offices today.


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