Chapter 7 Bankruptcy and Your Car in Florida: Will You Lose It?

One of the biggest concerns people have before filing Chapter 7 bankruptcy is simple and understandable:

“What happens to my car?”

If you rely on your vehicle to get to work, take your kids to school, or handle daily life, the thought of losing it can be overwhelming. The good news is that many people who file Chapter 7 bankruptcy in Florida are able to keep their car—especially with proper planning.

This article explains how Chapter 7 bankruptcy affects your car, Florida’s car exemption, and the options you may have depending on your situation.

Can You Keep Your Car in Chapter 7 Bankruptcy?

In many cases, yes. Whether you can keep your car in a Florida Chapter 7 bankruptcy depends on three key factors:

1. The value of your car

2. Whether you own it outright or have a loan

3. Which exemptions you can use

Florida has bankruptcy exemptions designed to protect certain property—including vehicles—so that people can get a fresh start without being left with nothing.

Florida’s Chapter 7 Vehicle Exemption

Florida allows you to protect up to $1,000 of equity in a motor vehicle using the state vehicle exemption.

Equity is the difference between:

• What the car is worth, and

• What you still owe on the loan (if any)

Example:

• Car value: $9,000

• Loan balance: $8,500

• Equity: $500

In this situation, the car is fully protected under Florida’s $1,000 vehicle exemption.

Using the Florida Wildcard Exemption to Protect Your Car

If you do not claim Florida’s homestead exemption, you may be able to use the Florida wildcard exemption, which can protect up to $4,000 of personal property.

This wildcard exemption is often used to:

• Protect a car with more than $1,000 in equity

• Fully protect a paid-off vehicle

• Combine with the vehicle exemption for additional coverage

Strategic exemption planning is one of the most important parts of a successful Chapter 7 case.

What If You Are Still Making Car Payments?

If you are financing your vehicle, Chapter 7 bankruptcy does not automatically eliminate your loan if you want to keep the car.

You typically have three options:

1. Reaffirm the Car Loan

A reaffirmation agreement keeps the loan in place after bankruptcy. You continue making payments, and the lender keeps its lien on the vehicle.

2. Surrender the Car

If the payments are unaffordable or the car is unreliable, you can surrender the vehicle and discharge the remaining balance in bankruptcy.

3. Redeem the Car

In some cases, you may be able to redeem the vehicle by paying its current replacement value in a lump sum—often less than what is owed.

Each option has pros and cons, and the right choice depends on your finances and long-term goals.

What Happens to Paid-Off Cars in Chapter 7?

If your car is paid off, the focus shifts entirely to value and exemptions.

• If the equity is within Florida’s exemptions, you can keep the car.

• If the equity exceeds available exemptions, the Chapter 7 trustee could potentially sell the vehicle to pay creditors.

However, many paid-off cars fall within exemption limits, especially when the wildcard exemption is available.

Does Chapter 7 Stop Car Repossession?

Yes—temporarily.

When you file Chapter 7 bankruptcy, the automatic stay immediately stops:

• Car repossessions

• Collection calls

• Lawsuits

• Wage garnishments

If you are behind on car payments, the stay gives you breathing room to decide whether to keep, surrender, or redeem the vehicle.

Why Planning Matters Before Filing Chapter 7

The difference between keeping and losing a car often comes down to proper planning before filing. Timing, vehicle valuation, exemption selection, and loan status all matter.

Filing without guidance can lead to:

• Unnecessary surrender of a vehicle

• Loss of valuable equity

• Missed exemption opportunities

Talk to a Tampa Chapter 7 Bankruptcy Attorney About Your Car

If you are considering Chapter 7 bankruptcy and are worried about your car, speaking with an experienced Tampa bankruptcy attorney can help you understand your options before you file.

At chapter7tampa.com, we help clients:

• Protect their vehicles whenever possible

• Understand Florida bankruptcy exemptions

• Make informed decisions about car loans and paid-off vehicles

Schedule a confidential consultation today to find out how Chapter 7 bankruptcy may affect your car and whether it can be protected under Florida law.