Can I Keep My Car if I File for Chapter 7 Bankruptcy in Georgia?
Can I Keep My Car if I File for Chapter 7 Bankruptcy in Georgia?
Filing for Chapter 7 bankruptcy in Georgia can be a way to discharge overwhelming debt and get a fresh start. However, one common concern is whether you can keep your car. The answer depends on several factors, including your car’s value, loan status, and Georgia’s exemption laws. At The Boone Firm, P.C., we provide expert legal assistance to the Atlanta public, helping clients navigate Chapter 7 bankruptcy while protecting essential assets like their vehicles.
Understanding Car Exemptions in Georgia
Georgia allows certain property exemptions under state law, meaning you can protect specific assets from being sold during the bankruptcy process.
- Motor Vehicle Exemption:
Georgia law allows individuals to exempt up to $5,000 of equity in a motor vehicle. If the equity in your car is less than or equal to this amount, you can likely keep your car. - Wildcard Exemption:
If the motor vehicle exemption isn’t enough, Georgia also provides a wildcard exemption of up to $1,200, plus any unused portion of your homestead exemption (up to $5,000). This can be applied to protect additional car equity.
Determining Car Equity
Car equity is calculated as:
Car’s Market Value – Outstanding Loan Balance = Equity
For example, if your car is worth $12,000 and you owe $8,000 on the loan, your equity is $4,000. Since this is below Georgia’s $5,000 motor vehicle exemption, you could keep your car.
What If My Car’s Equity Exceeds the Exemption?
If your car’s equity exceeds the exemption limit, there are a few options:
- Negotiate a Buyback: You may be able to pay the trustee the non-exempt portion of the car’s value to keep it.
- Redeem the Car: Pay the current market value of the car in a lump sum, allowing you to own it free of any liens.
- Reaffirm the Loan: Agree to continue making payments under the existing loan terms, which keeps the car out of the bankruptcy estate.
What If I’m Still Paying Off My Car Loan?
If your car is financed, you can keep it by continuing to make your loan payments. However, the lender may require you to sign a reaffirmation agreement, which excludes the loan from the bankruptcy discharge, meaning you’re still responsible for payments even after your other debts are discharged.
Risks of Keeping Your Car in Chapter 7
While you can keep your car under certain conditions, there are risks:
- Missed Payments: If you default on loan payments after reaffirmation, the lender can repossess the car.
- Equity Assessment: If your equity is too high and you can’t cover the non-exempt portion, the trustee may sell the car.
How The Boone Firm, P.C. Can Help
Navigating car ownership during Chapter 7 bankruptcy in Georgia can be complex. At The Boone Firm, P.C., we understand the intricacies of bankruptcy law and can help you evaluate your options to protect your vehicle. Our experienced attorneys will guide you through every step, ensuring your rights are protected and you make informed decisions.
Contact us today for a consultation to discuss your bankruptcy options and safeguard your assets.

