Keep Your Car in Chapter 7 or 13

Can You Keep Your Car in Chapter 7 or Chapter 13?

In short: You can often keep a car in a Philadelphia bankruptcy, and the chapter changes how. In Chapter 7, the question is equity: what the car is worth, minus the real loan balance. For cases filed from April 1, 2025 through March 31, 2028, the federal motor-vehicle exemption under 11 U.S.C. § 522(d)(2) protects $5,025 of equity in one vehicle. Pennsylvania’s own general monetary exemption is $300, which is why most people protecting a car choose the federal list. In Chapter 13, you usually keep the car by paying the lender through a plan. A car bought for personal use within 910 days of filing generally cannot be crammed down to its value. This is general information, not a prediction about your car. Call (215) 774-3916 for a free consultation with Cibik Law, P.C. People hear two slogans. One is “you lose the car if you file.” The other is “bankruptcy wipes the car loan.” Both are too simple. Some people keep a paid-off car because the equity fits an exemption. Some people keep a financed car because they stay current and the equity is small. Some people should not file Chapter 7 because the car is worth far more than the exemption and they have no other way to cover the difference. Some people are already three payments behind, and Chapter 7 will not build them a catch-up plan. Nothing on this page is legal advice. Exemption dollar amounts change on a schedule. A lawyer applies the figure that is in force on the day a case is filed. The figures below are the federal amounts for cases filed on or after April 1, 2025, until the next adjustment on April 1, 2028. Confirm them before you file. Individuals who live in Philadelphia file in the United States Bankruptcy Court for the Eastern District of Pennsylvania. Start with equity, not the monthly payment Equity is what is left after you subtract the real payoff from a realistic value. The monthly payment is not the equity. The sticker price from three years ago is not the value. A realistic private-party value, not the highest number on a good week Minus the loan payoff, including fees the lender would actually charge What remains is equity. If the payoff is higher than the value, the equity is zero or negative. That is being upside down. It is a different problem from a paid-off car. A car worth $9,000 with a $8,200 loan has about $800 of equity. A car worth $9,000 with no loan has $9,000 of equity. People mix those up, and the chapter choice follows the mix-up. A short comparison of the two chapters is in Chapter 7 vs. Chapter 13 in Pennsylvania. The federal vehicle number, and the Pennsylvania alternative Pennsylvania lets a bankruptcy filer choose one complete set of exemptions: the state list, or the federal list in 11 U.S.C. § 522(d). You do not get the federal car exemption and a Pennsylvania-only exemption on the side. It is one menu. The state general monetary exemption is $300 under 42 Pa.C.S. § 8123. Three hundred dollars does not protect a working car. For most people who need to protect a vehicle, the practical choice is the federal list, because that is the list with a motor-vehicle line. For cases filed from April 1, 2025 through March 31, 2028, that line is $5,025 of the debtor’s interest in one motor vehicle, under 11 U.S.C. § 522(d)(2). It is one vehicle, not the whole driveway. A spouse who files jointly has a separate exemption of their own. That does not automatically double onto a single car that only one spouse owns. If both names are on the title, each spouse’s interest is analyzed. If only one name is on the title, the other spouse’s vehicle exemption does not move onto that car. The federal wildcard under § 522(d)(5) is a separate line: $1,675, plus up to $15,800 of any unused homestead exemption. A renter who uses none of the homestead line can sometimes apply wildcard dollars to a car. Household goods, a tax refund, and cash share that same wildcard. Do not add $5,025 and $15,800 and call the total “what I can keep in the car.” Other property uses the wildcard first. A lawyer runs the whole list against the whole household. Choosing the federal list means the household goods, the wildcard, and the homestead — if you also have a house — come from the federal list too. The house analysis is a different article. The car is often what decides the menu when there is no house, and it is rarely the only item on the list. Chapter 7 when the equity fits Chapter 7 is a liquidation chapter. The trustee looks for non-exempt property that can be sold for creditors. If the equity in the car fits the exemption you claimed, people often keep the car through a Chapter 7. The discharge can wipe many unsecured debts, which can make the car payment easier because those other bills stop. The exemption does not pay off the loan, and it does not erase the lien. The lender still has a security interest. The usual formal paths are to stay in an arrangement the lender will accept, to sign a reaffirmation agreement under 11 U.S.C. § 524 when that is truly the right paper, to redeem the car under § 722 by paying its value in a lump sum, or to surrender it. “I will just keep paying” is not, by itself, a plan the Code guarantees. Practice in the Eastern District of Pennsylvania is something to ask about with the actual contract in hand. Do not assume a ride-through from a blog. If the equity is clearly above every exemption you can apply, a Chapter 7 trustee can seek to sell the car, pay the loan, pay you the exempt amount, and distribute the rest. That is the outcome people are afraid of. It is a real outcome when the car is paid off, or nearly paid off, and the equity is large. It is not the outcome for a car with $800 of equity and a $5,025 exemption. Chapter 13 when you are behind, or the equity is high Chapter 13 is a payment plan, usually three to five years, for someone with regular income. Car owners in Philadelphia use it for two problems Chapter 7 does not solve well. Missed payments. The plan can address the arrears while you keep the car, if the payment the plan requires is one you can actually make. A plan you cannot fund fails later, which is harder than choosing a different path at the start. Equity above the exemption. You can often keep the car by paying unsecured creditors, through the plan, at least as much as they would have received if the non-exempt equity had been sold in a Chapter 7. That is the best-interest test. The plan has to be funded. There is a third rule that surprises people who owe more than the car is worth. If the car was bought for the debtor’s personal use within 910 days before the filing, the hanging paragraph of 11 U.S.C. § 1325(a) generally stops a cramdown. You do not split the loan into a secured piece equal to today’s value and an unsecured piece for the rest. The lender’s allowed secured claim is handled at the full amount the Code requires, not at a hopeful private-party number. A purchase-money loan older than 910 days can sometimes be paid at the car’s value, with the balance treated as unsecured. The 910 days run backward from the filing date. A loan that is 900 days old and a loan that is 1,000 days old are different cases. Bring the contract so the date is read off the paper. The 910-day rule is about purchase-money loans on a personal-use vehicle. A car you bought for a business, or a loan that refinanced an older balance, can fall outside it. Do not sort that question from memory. What to pull together before the consultation The current loan statement, the payoff, and how many payments you are behind The contract date, or the retail installment agreement Whose name is on the title A realistic value, and the mileage The other debts: cards, medical, taxes, support Whether you are also trying to keep a house. The exemption menu is one choice for the whole case. The house article walks through that side: filing bankruptcy with a house in Philadelphia. Taxes, support, and a car loan you took out last month are not treated like an old credit card. Mention them. Cibik Law, P.C. represents individuals and families across Philadelphia and the nearby counties. The first consultation is free for qualified Philadelphia-area residents, with offices in Philadelphia and King of Prussia, and there is no obligation to file. More about the practice is on the bankruptcy practice page. Free consultation: (215) 774-3916. General information only. Every car, and every case, is different. Frequently asked questions Can I keep my car if I file Chapter 7 in Philadelphia?Often, yes, when the equity in the car fits an exemption you can claim and the loan is handled. For cases filed from April 1, 2025 through March 31, 2028, the federal vehicle exemption is $5,025 of equity in one motor vehicle. Equity above that has to be covered by another exemption you are allowed to use, or a Chapter 7 trustee can look at selling the car.Does Pennsylvania have a useful car exemption?The Pennsylvania general monetary exemption is $300 under 42 Pa.C.S. section 8123. That is not a car plan. Pennsylvania lets a filer choose the state list or the federal list, not a mix of both. People protecting a car usually compare the federal list because that is the list with a motor-vehicle exemption.How is Chapter 13 different for a car loan?Chapter 13 is a payment plan. You can often keep the car by paying the lender through the plan. If you bought the car for personal use within 910 days before filing, the Bankruptcy Code generally stops you from cutting the secured claim down to the car’s value. An older loan can sometimes be paid at value, with the rest treated as unsecured.Does the exemption pay off the loan?No. An exemption protects equity from the trustee. It does not erase the lender’s lien. Staying current, a reaffirmation, a redemption, or a Chapter 13 plan are the usual ways the loan itself gets handled. Which one fits depends on the balance, the value, and the district’s practice.What if I am behind on the payments?Chapter 7 can discharge your personal obligation on many loans, but it does not include a plan to catch up missed car payments, and the lender can still enforce the lien. Chapter 13 is the chapter that is built to spread a car problem out over a plan, if you can fund the plan.

October 23, 2026
5:53 pm

In short: You can often keep a car in a Philadelphia bankruptcy, and the chapter changes how. In Chapter 7, the question is equity: what the car is worth, minus the real loan balance. For cases filed from April 1, 2025 through March 31, 2028, the federal motor-vehicle exemption under 11 U.S.C. § 522(d)(2) protects $5,025 of equity in one vehicle. Pennsylvania’s own general monetary exemption is $300, which is why most people protecting a car choose the federal list. In Chapter 13, you usually keep the car by paying the lender through a plan. A car bought for personal use within 910 days of filing generally cannot be crammed down to its value. This is general information, not a prediction about your car. Call (215) 774-3916 for a free consultation with Cibik Law, P.C.

People hear two slogans. One is “you lose the car if you file.” The other is “bankruptcy wipes the car loan.” Both are too simple. Some people keep a paid-off car because the equity fits an exemption. Some people keep a financed car because they stay current and the equity is small. Some people should not file Chapter 7 because the car is worth far more than the exemption and they have no other way to cover the difference. Some people are already three payments behind, and Chapter 7 will not build them a catch-up plan.

Nothing on this page is legal advice. Exemption dollar amounts change on a schedule. A lawyer applies the figure that is in force on the day a case is filed. The figures below are the federal amounts for cases filed on or after April 1, 2025, until the next adjustment on April 1, 2028. Confirm them before you file. Individuals who live in Philadelphia file in the United States Bankruptcy Court for the Eastern District of Pennsylvania.

Start with equity, not the monthly payment

Equity is what is left after you subtract the real payoff from a realistic value. The monthly payment is not the equity. The sticker price from three years ago is not the value.

A realistic private-party value, not the highest number on a good week
Minus the loan payoff, including fees the lender would actually charge
What remains is equity. If the payoff is higher than the value, the equity is zero or negative. That is being upside down. It is a different problem from a paid-off car.

A car worth $9,000 with a $8,200 loan has about $800 of equity. A car worth $9,000 with no loan has $9,000 of equity. People mix those up, and the chapter choice follows the mix-up. A short comparison of the two chapters is in Chapter 7 vs. Chapter 13 in Pennsylvania.

The federal vehicle number, and the Pennsylvania alternative

Pennsylvania lets a bankruptcy filer choose one complete set of exemptions: the state list, or the federal list in 11 U.S.C. § 522(d). You do not get the federal car exemption and a Pennsylvania-only exemption on the side. It is one menu.

The state general monetary exemption is $300 under 42 Pa.C.S. § 8123. Three hundred dollars does not protect a working car. For most people who need to protect a vehicle, the practical choice is the federal list, because that is the list with a motor-vehicle line.

For cases filed from April 1, 2025 through March 31, 2028, that line is $5,025 of the debtor’s interest in one motor vehicle, under 11 U.S.C. § 522(d)(2). It is one vehicle, not the whole driveway. A spouse who files jointly has a separate exemption of their own. That does not automatically double onto a single car that only one spouse owns. If both names are on the title, each spouse’s interest is analyzed. If only one name is on the title, the other spouse’s vehicle exemption does not move onto that car.

The federal wildcard under § 522(d)(5) is a separate line: $1,675, plus up to $15,800 of any unused homestead exemption. A renter who uses none of the homestead line can sometimes apply wildcard dollars to a car. Household goods, a tax refund, and cash share that same wildcard. Do not add $5,025 and $15,800 and call the total “what I can keep in the car.” Other property uses the wildcard first. A lawyer runs the whole list against the whole household.

Choosing the federal list means the household goods, the wildcard, and the homestead — if you also have a house — come from the federal list too. The house analysis is a different article. The car is often what decides the menu when there is no house, and it is rarely the only item on the list.

Chapter 7 when the equity fits

Chapter 7 is a liquidation chapter. The trustee looks for non-exempt property that can be sold for creditors. If the equity in the car fits the exemption you claimed, people often keep the car through a Chapter 7. The discharge can wipe many unsecured debts, which can make the car payment easier because those other bills stop.

The exemption does not pay off the loan, and it does not erase the lien. The lender still has a security interest. The usual formal paths are to stay in an arrangement the lender will accept, to sign a reaffirmation agreement under 11 U.S.C. § 524 when that is truly the right paper, to redeem the car under § 722 by paying its value in a lump sum, or to surrender it. “I will just keep paying” is not, by itself, a plan the Code guarantees. Practice in the Eastern District of Pennsylvania is something to ask about with the actual contract in hand. Do not assume a ride-through from a blog.

If the equity is clearly above every exemption you can apply, a Chapter 7 trustee can seek to sell the car, pay the loan, pay you the exempt amount, and distribute the rest. That is the outcome people are afraid of. It is a real outcome when the car is paid off, or nearly paid off, and the equity is large. It is not the outcome for a car with $800 of equity and a $5,025 exemption.

Chapter 13 when you are behind, or the equity is high

Chapter 13 is a payment plan, usually three to five years, for someone with regular income. Car owners in Philadelphia use it for two problems Chapter 7 does not solve well.

Missed payments. The plan can address the arrears while you keep the car, if the payment the plan requires is one you can actually make. A plan you cannot fund fails later, which is harder than choosing a different path at the start.
Equity above the exemption. You can often keep the car by paying unsecured creditors, through the plan, at least as much as they would have received if the non-exempt equity had been sold in a Chapter 7. That is the best-interest test. The plan has to be funded.

There is a third rule that surprises people who owe more than the car is worth. If the car was bought for the debtor’s personal use within 910 days before the filing, the hanging paragraph of 11 U.S.C. § 1325(a) generally stops a cramdown. You do not split the loan into a secured piece equal to today’s value and an unsecured piece for the rest. The lender’s allowed secured claim is handled at the full amount the Code requires, not at a hopeful private-party number. A purchase-money loan older than 910 days can sometimes be paid at the car’s value, with the balance treated as unsecured. The 910 days run backward from the filing date. A loan that is 900 days old and a loan that is 1,000 days old are different cases. Bring the contract so the date is read off the paper.

The 910-day rule is about purchase-money loans on a personal-use vehicle. A car you bought for a business, or a loan that refinanced an older balance, can fall outside it. Do not sort that question from memory.

What to pull together before the consultation

The current loan statement, the payoff, and how many payments you are behind
The contract date, or the retail installment agreement
Whose name is on the title
A realistic value, and the mileage
The other debts: cards, medical, taxes, support
Whether you are also trying to keep a house. The exemption menu is one choice for the whole case. The house article walks through that side: filing bankruptcy with a house in Philadelphia.

Taxes, support, and a car loan you took out last month are not treated like an old credit card. Mention them.

Cibik Law, P.C. represents individuals and families across Philadelphia and the nearby counties. The first consultation is free for qualified Philadelphia-area residents, with offices in Philadelphia and King of Prussia, and there is no obligation to file. More about the practice is on the bankruptcy practice page.

Free consultation: (215) 774-3916. General information only. Every car, and every case, is different.

Frequently asked questions

Can I keep my car if I file Chapter 7 in Philadelphia?

Often, yes, when the equity in the car fits an exemption you can claim and the loan is handled. For cases filed from April 1, 2025 through March 31, 2028, the federal vehicle exemption is $5,025 of equity in one motor vehicle. Equity above that has to be covered by another exemption you are allowed to use, or a Chapter 7 trustee can look at selling the car.

Does Pennsylvania have a useful car exemption?

The Pennsylvania general monetary exemption is $300 under 42 Pa.C.S. section 8123. That is not a car plan. Pennsylvania lets a filer choose the state list or the federal list, not a mix of both. People protecting a car usually compare the federal list because that is the list with a motor-vehicle exemption.

How is Chapter 13 different for a car loan?

Chapter 13 is a payment plan. You can often keep the car by paying the lender through the plan. If you bought the car for personal use within 910 days before filing, the Bankruptcy Code generally stops you from cutting the secured claim down to the car’s value. An older loan can sometimes be paid at value, with the rest treated as unsecured.

Does the exemption pay off the loan?

No. An exemption protects equity from the trustee. It does not erase the lender’s lien. Staying current, a reaffirmation, a redemption, or a Chapter 13 plan are the usual ways the loan itself gets handled. Which one fits depends on the balance, the value, and the district’s practice.

What if I am behind on the payments?

Chapter 7 can discharge your personal obligation on many loans, but it does not include a plan to catch up missed car payments, and the lender can still enforce the lien. Chapter 13 is the chapter that is built to spread a car problem out over a plan, if you can fund the plan.