Can I file Chapter 7 and still keep my car?

Yes. Your car is not necessarily automatically protected, but there are certain exemptions under a Chapter 7 bankruptcy that allow debtors keep their vehicles.

Keeping a vehicle is a concept that is in line with the goal of a fresh start being available to debtors after they have filed a Chapter 7 in Pennsylvania. This is why there are exemptions built into the U.S. Bankruptcy Code.

Depending on case circumstances, the bankruptcy process may result in your vehicle being sold to pay other debts. However, an experienced bankruptcy attorney at Melaragno, Placidi & Parini works to make excluding your vehicle out of the bankruptcy process a priority.

An exemption means the property in question (including a vehicle) will not be sold and exemptions are usually claimed at the outset of a bankruptcy filing. At Melaragno, Placidi & Parini, you know right away what exemptions you have and how they affect your filing.

In relation to your vehicle, there are three important exemptions under section 522(d)(2) of the US Bankruptcy Code:

The motor vehicle exemption – where a debtor can take an exemption in one vehicle for a total value of up to $3,775. This is determined by checking the blue book value and subtracting it from the overall debt owed. If the amount is within limits, the vehicle is not liquidated. If the amount is close, your attorney can help you.

The wild card exemption – Pennsylvania residents have a wildcard exemption of $300. Many people choose to use it to help them keep their car, even though it can be used for anything.

The tools of the trade exemption – if a vehicle is a part of your business, you can exempt up to $2,375 for tools of the trade the debtor or their dependents own.

The equity you have in your vehicle is a central issue when it comes to determining whether a car can be kept after filing a Chapter 7 bankruptcy.

There are other options open when it comes to keeping your vehicle during a Chapter 7 bankruptcy filing. For instance, you can exclude the vehicle if you meet the exemption requirements; surrender the vehicle; redeem the vehicle by paying fair market value in a lump sum within 30 days of filing; or reaffirm the debt owed, meaning you are obligated to continue paying the debt. If you do not continue to pay, the vehicle may be repossessed.

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