If you file for bankruptcy, you definitely may be able to keep your car. We work with clients all the time who want to keep their cars, and in many situations it's not a problem at all.

In a Chapter 7 bankruptcy, whether you can keep the car depends in part on how much equity you have in it. Equity is determined by subtracting the amount you owe on the loan from the car’s value. For example, if your car is worth $6,000 and you owe $4,000, you have $2,000 of equity.

In Missouri, an individual filing Chapter 7 Bankruptcy can protect $3,000 of equity in a vehicle (or vehicles) and a married couple filing jointly can protect $6,000 of equity. If your equity exceeds those amounts you may be able to protect it with other bankruptcy exemptions.

In Kansas you're allowed to have one vehicle for transportation that can’t exceed $20,000 in value unless it’s equipped for the handicapped.

There are three ways to handle the car loan, and your choice will depend in part on your resources and priorities:

  1. Reaffirm the debt: sign papers stating that even though you're filing for Chapter 7 bankruptcy protection you “reaffirm” the car is your obligation and that you want to keep paying on it.
  2. Redeem the car: pay the value of the car rather than the amount you owe
  3. Surrender the car: include the car in the bankruptcy filing and let it go


In Chapter 13 bankruptcy, your debts are consolidated and you repay some or all of them, so this form of bankruptcy might be an option worth considering as well.

Figuring out all of the relevant exemptions and other factors in a bankruptcy case can be complicated. Castle Law Office has been handling bankruptcies for Kansas City clients from more than 14 years. If you need the fresh start bankruptcy can provide, call us today at 816-842-6200 to speak with an attorney. Or click here to email us and schedule your free consultation.