 TITLE: What Happens to My Car During Bankruptcy? CONTENT: What Happens to Your Car in Chapter 13 Bankruptcy?\n--------------------------------------------------\nAnother form of bankruptcy is Chapter 13, which works a bit differently from Chapter 7. Rather than liquidating non-exempt assets to repay creditors, you'll enter a debt repayment plan. Your property isn't sold off with this form of bankruptcy; instead, your finances are reorganized and you'll begin the process of repayment. If you own your car outright you'll be able to keep it.\nYou will have a repayment period of either three or five years, and once that period ends, some remaining debts can be discharged—meaning you don't have to pay them anymore. Not all debts can be discharged, however. Credit card and medical debt can be discharged, for example, but mortgages and student loans cannot.\nWhen you file Chapter 13 bankruptcy, your debt is grouped into three buckets:\n*   **Priority debts**: These must be repaid in full. This includes bankruptcy costs, unpaid tax bills from the past three years, and child and spousal support.\n*   **Secured debts**: Car loans are included in this category. If you have a car loan, the amount you owe on it may be reduced in the Chapter 13 bankruptcy process if you owe more on it than its current value. Also, if you can qualify for a repayment plan and get caught up on your loan, you may be able to keep the vehicle.\n*   **Unsecured debts**: These will be discharged in the bankruptcy after you've completed your repayment plan.\nKeep in mind that if you aren't able to catch up on your auto loan, or you can't afford repairs or payments on the car anymore, you can get out of payments by surrendering the car back to the lender, which, as mentioned, has credit consequences. END