Can I Keep My House if I File Bankruptcy? What About My Car?


Many people hesitate to declare bankruptcy out of fear.

“Will I lose my house? What will happen to my car?”

And while every situation is unique, most people who file for bankruptcy are able to stay in their homes and keep their cars. Whether you’re able to do the same depends on a few different factors:

  • The type of personal bankruptcy you file — Chapter 7 or Chapter 13
  • The equity you have in your home or vehicle
  • Whether you can afford your mortgage payments

As always, it’s absolutely essential for anyone considering bankruptcy to seek the assistance of a qualified bankruptcy attorney.

Keep reading to learn more about the factors that may determine what happens to your property.

If You File Chapter 7 Bankruptcy

Filing Chapter 7 helps individuals get quick relief from different types of debt such as credit cards or medical bills.

If you file Chapter 7 bankruptcy in Missouri, you can keep your house under two conditions:

  • You stay current with your mortgage payments
  • The equity you have in your house is exempt under Missouri law

For example, in Missouri, you can exempt up to $15,000 worth of equity in your home, and up to $5,000 in a mobile home.

If you’re already behind on mortgage payments and are unable to afford the payments, you’re at greater risk of losing your house. Filing Chapter 7 bankruptcy may buy you some extra time before the bank forecloses in order to move out of the home.

What about your car? Similar to the above scenario, if you file Chapter 7 you can keep your car by meeting two conditions:

  • Stay current on your car payments.
  • Exempt the equity in your vehicle as permitted by Missouri law.

Missouri allows individuals to exempt up to $3,000 of equity in a motor vehicle as long as your name is on the title of a vehicle.  A husband and wife filing bankruptcy each get a $3,000 exemption.

Some lenders will require you to sign a contract that “reaffirms” your debt in lieu of repossession. If your car is worth less than the balance on your loan, the court may let you redeem it by paying a lump sum for the car’s actual value.

If You File Chapter 13 Bankruptcy

Filing Chapter 13 bankruptcy may be an option if you’re behind on your mortgage or auto loan payments but want to keep your home.

Individuals who file Chapter 13 generally have a greater chance of keeping their homes and personal vehicles.

Under Chapter 13, the court approves a payment plan to cover debts that are past due, in the form of fixed monthly payments over a 3 to 5 year time frame. Your lender cannot foreclose on your home as long as you stay current with your Chapter 13 payments.

A Chapter 13 payment plan may also be used to catch up on overdue car payments by including them in your payment plan, and avoid having your vehicle repossessed.

Are you considering whether bankruptcy is the right option for you?


Contact us at Reynolds & Gold LLC. Our experienced bankruptcy lawyers have helped lots of folks just like you keep their homes and cars while resolving their debts.