Your car gets you to work, helps you take care of your family and keeps your life running in Alexandria, Louisiana. When you consider filing bankruptcy, one of the biggest fears is losing your vehicle. Whether you can keep your car in bankruptcy depends on how much equity you have in it, whether you still owe money on it and which type of bankruptcy you file.
How Louisiana exemptions protect your vehicle
Under Louisiana Revised Statutes Section 13:3881, Louisiana law allows you to exempt up to $7,500 in vehicle equity. Equity represents your car’s current value minus your outstanding loan balance. For example, a $10,000 car with a $5,000 loan balance gives you $5,000 in equity.
If your equity is less than $7,500, you can typically keep your car in Chapter 7 bankruptcy. If your equity exceeds this amount, the bankruptcy trustee may sell your vehicle to pay your creditors. You would receive the $7,500 exemption amount, but you would lose the car.
Louisiana House Bill 135, currently moving through the 2026 legislative session, proposes to increase this exemption to $15,000. The bill would also allow families to protect a second vehicle (up to $15,000 in equity) if you are married or have a licensed driver child in your household. The timing of your bankruptcy filing may determine whether you can use the current $7,500 limit or the proposed $15,000 limit if the bill passes.
Understanding exemptions is important, but they only protect equity you own outright.
What happens if your car is still on loan
If you have a car loan, you must stay current on your payments to keep the vehicle. Chapter 7 bankruptcy eliminates your personal debt, but the lender still has a lien on the car. Falling behind on payments allows the lender to repossess the vehicle even during bankruptcy.
Chapter 13 bankruptcy provides additional solutions for those struggling with car loan payments. Your repayment plan allows you to make up overdue payments gradually over a three to five year period. This approach may save a vehicle that would otherwise face repossession.
Why understanding your options matters
Filing bankruptcy without understanding exemptions can result in losing assets you could have protected. The value of your car, the amount you owe and your payment history all affect whether you can keep it. An experienced bankruptcy attorney can review your situation and explain which chapter protects your vehicle while giving you debt relief. The vehicle that carries you to work every day can either stay in your driveway or disappear to pay your debts, depending on choices you make before you file.