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Bankruptcy FAQ

Can I keep my car if I file for Chapter 7 bankruptcy?

by | Jul 21, 2021 | Bankruptcy, Chapter 7

Filing for Chapter 7 bankruptcy may be the best solution to eliminate overwhelming debts and start anew. Chapter 7 bankruptcy discharges the debts you have left after selling as much property as possible to repay the creditors. Sometimes you’ll have to make sacrifices like selling your car, but this is usually not  the case.

Motor vehicle exemptions

If you have lived in Louisiana for at least two years, you may be eligible to get a motor vehicle exemption when you file for bankruptcy. The motor vehicle exemption in Louisiana protects up to $7,500 of equity. Equity is how much a car is worth, depending on loans, age and condition. If your car’s equity is under $7,500, the trustee cannot sell your car.


If you have a loan on your car and you are current on the payments, then the amount left to pay will be subtracted from the car’s equity value. However, if you are behind on your car loan, the bank will take it away. Therefore, you need to either own your vehicle or be current on your car loan payments so that you can exempt your car under the law.

Additional considerations

Also, the trustee will not sell your car if little to nothing would remain for the creditors after paying off the car’s costs. In that case, the trustee will abandon the car, and you may keep it. Trustees may also give you a few months to repurchase your car.

Bankruptcy as a solution

If you cannot keep the car, you will receive the total amount of the exemption back. Losing your car may not be what you are looking for, but it is a solution to minimize your debts and give you peace of mind.