You have choices — you don’t automatically lose your car in a Chapter 7. If it’s financed, you can keep it and keep paying (by reaffirming or redeeming the loan), or surrender it and walk away with the balance discharged.
If it’s leased, you can keep the lease and keep paying, or return the car and discharge what’s left. Either way, being current and carrying insurance is what keeps “keep the car” on the table.
For a lot of people, the car is the real worry — it’s how you get to work, and losing it would undo the fresh start before it began. The good news is that Chapter 7 gives you options, and for most people the car comes through the case just fine.
If your car is financed (a loan)
A car loan is a secured debt, so you generally have three paths:
- Reaffirm — you agree to stay on the loan and keep paying, and you keep the car. You remain personally responsible for it, so this only makes sense if the payment fits your budget.
- Redeem — you pay the lender the car’s current value in a lump sum and own it outright. If you owe far more than the car is worth, this can be a real bargain.
- Surrender — you give the car back, and the remaining balance is wiped out with your other debts.
Most people who can afford the payment and want the car simply keep paying. The key is being current when you file.
What about the equity in my car?
Nevada’s motor vehicle exemption currently protects up to $15,000 of equity in your car (and more if it’s equipped for a disability). Since most financed cars are worth about what’s owed on them, there’s usually little or no exposed equity — which is why the trustee rarely has any interest in your vehicle, the same reason most filers keep everything they own. It’s the same principle that lets people keep their house: exempt equity stays yours.
If your car is leased
A lease works a little differently. You can assume the lease — keep it and keep making payments as before — or reject it, return the car, and have the remaining lease obligation discharged. So a lease you can’t afford becomes a debt you can walk away from, and a lease you want to keep usually stays right where it is.
What if I’m behind on the car payment?
This is the one real limit. Chapter 7 wipes out debt, but it doesn’t give you a way to make up missed car payments — so if you’ve fallen behind and want to keep the car, a lender can still repossess. That’s where Chapter 13 comes in: it lets you catch up on the past-due amount over the life of the plan while you keep driving.
Do I have to keep the car to file?
Not at all — and for an upside-down loan, letting it go is often the quiet win. When you surrender a financed car, the “deficiency” (the gap between what it’s worth and what you owe) is discharged too. No more payments on a car worth less than the loan, and no bill chasing you afterward.
Being straight with you: if you’re buried in a car you can’t really afford, surrender is often the smart move — the discharge kills the deficiency and frees up your budget. If you love the car and the payment works, you can usually keep it. At Discount Lawyers, we’ll run both scenarios with you honestly rather than push you toward either one.
How we help
At Discount Lawyers, a Las Vegas bankruptcy lawyer will look at your loan or lease, your equity, and whether you’re current, then lay out exactly what keeping or surrendering the car would mean for you. A Reno bankruptcy attorney on our team does the same up north, in English and Spanish.
You decide what happens to your car — not the other way around.
Common questions
Can I keep my car if I file Chapter 7?
Usually, yes. If your car is financed and you’re current, you can keep it by reaffirming or redeeming the loan and continuing to pay. If it’s leased, you can assume the lease and keep paying. You’re not forced to give up a car you can afford.
What happens if I surrender my car in Chapter 7?
You return the vehicle and the remaining loan balance is discharged — including any deficiency if the car is worth less than you owe. For an upside-down loan, that can be a significant relief.
What if I’m behind on my car payments?
Chapter 7 doesn’t let you catch up on missed payments. If you’re behind and want to keep the car, Chapter 13 is usually the better tool, because it lets you cure the past-due amount over time.