How to Keep Your Car During Bankruptcy: A Guide for Maryland and Florida Residents

Facing financial struggles is never easy. If you are dealing with wage garnishment, foreclosure threats, lawsuits, or the fear of losing your assets, you are not alone. Bankruptcy can feel overwhelming, but it is also the first step toward recovery. One of the biggest concerns I hear from people is about their car. How do you keep your car during bankruptcy? I’m Sheereen E. McNair, founder of Middleton Legal, and I want to walk you through what you need to know to protect your vehicle while you get your finances back on track.

Understanding How to Keep Your Car During Bankruptcy

Your car is more than just a vehicle. It’s your way to work, to school, to doctor appointments, and to keep your family moving. When you file for bankruptcy in Maryland or Florida, you might worry about losing this essential asset. The good news is that bankruptcy laws provide ways to help you keep your car.

There are two main types of bankruptcy that people in Maryland and Florida use: Chapter 7 and Chapter 13. Each has different rules about what happens to your car.

• Chapter 7 Bankruptcy is often called liquidation bankruptcy. It can wipe out many debts quickly, but it may require selling some assets if they are not protected by exemptions.

• Chapter 13 Bankruptcy is a repayment plan that lasts three to five years. It allows you to keep your property, including your car, as long as you keep up with the payments.

  
  

Both states have specific exemptions that protect a certain amount of equity in your car. Equity is the difference between what your car is worth and what you owe on it. If your car’s equity is below the exemption limit, you can usually keep it.

For example, Maryland allows a motor vehicle exemption of up to $5,000, and Florida offers a similar exemption. If your car’s equity is less than these amounts, the bankruptcy trustee cannot take your car to sell it.

Eye-level view of a parked car in a residential driveway

What You Need to Know to Keep Your Car During Bankruptcy

To keep your car during bankruptcy, you need to understand a few key points:

1. You must keep making your car payments. If you have a loan on your car, bankruptcy does not erase that debt unless you surrender the car. You must continue paying your lender to keep the car.

2. You can redeem your car. In Chapter 7, if you want to keep your car but owe more than it is worth, you can pay the lender the current value of the car in a lump sum. This is called redemption.

3. You can reaffirm your car loan. This means you agree to keep paying the loan even after bankruptcy. It keeps the loan in place and protects your car.

4. You can surrender the car. If keeping the car is not affordable, you can give it back to the lender and walk away from the loan.

   
   

Each option has pros and cons, and the best choice depends on your situation. For example, if you owe more than your car is worth, reaffirming the loan might not make sense. But if you need the car to get to work, redemption or reaffirmation could be the right path.

If you are wondering can i keep my car if i file for bankruptcy, the answer is often yes, but it depends on your loan, your car’s value, and your state’s exemptions.

How Much Do You Pay Monthly for Bankruptcies?

One of the biggest questions I get is about the cost of bankruptcy, especially monthly payments if you file Chapter 13. Here’s what you need to know:

• Chapter 7 bankruptcy usually does not have monthly payments. You pay filing fees and attorney fees upfront or in installments, but after that, you don’t have a repayment plan.

• Chapter 13 bankruptcy requires monthly payments to a trustee. These payments cover your debts over three to five years. The amount depends on your income, expenses, and the amount of debt you owe.

  
  

Your car payment is part of your budget in Chapter 13. You must keep making your car payments to keep your vehicle. The repayment plan will also include payments to other creditors based on what you can afford.

For many people, Chapter 13 is a way to stop wage garnishments and keep their car and home while paying off debts in a manageable way. It is important to work with a bankruptcy attorney who can help you create a plan that fits your budget and goals.

Close-up view of a calculator and monthly budget sheet on a desk

Practical Steps to Protect Your Car When Filing Bankruptcy

Here are some practical steps you can take to keep your car safe during bankruptcy:

1. Know your state’s exemption limits. Maryland and Florida have different rules, so it’s important to understand what applies to you.

2. Gather your car loan documents. Know how much you owe and the terms of your loan.

3. Get your car’s current value. Use resources like Kelley Blue Book or NADA Guides to find out what your car is worth.

4. Decide which bankruptcy chapter fits your needs. Chapter 7 might be faster, but Chapter 13 can help you keep your car and home.

5. Keep making your car payments. Missing payments can lead to repossession, even during bankruptcy.

6. Talk to a bankruptcy attorney. They can help you understand your options and protect your rights.

   
   

Remember, bankruptcy is not the end. It is the start of a new chapter where you regain control of your finances. Keeping your car is part of that recovery.

Moving Forward with Confidence

If you are in Maryland or Florida and struggling with debt, you don’t have to carry this burden alone. Bankruptcy can stop wage garnishments, protect your home, and help you keep your car. It is a legal tool designed to give you a fresh start.

I understand how hard it is to face these challenges, especially if you are managing a household on your own. You deserve a chance to rebuild without losing the things you need most.

If you want to learn more about how to keep your car during bankruptcy or discuss your specific situation, please reach out. Call or text me at 240-896-3253, message me in Glade, or visit middletonbankruptcy.com for a free consultation. Let’s take the legal pieces off your plate so you can focus on your recovery.

You are not alone, and there is hope ahead.