How do you go about keeping your car loans while in bankruptcy?

When you declare bankruptcy, the idea is usually to get rid of most of your debt or at least to make it more manageable. Exactly how your eligible debts are dealt with during a bankruptcy is going to vary depending on whether you are filing Chapter 7 bankruptcy or Chapter 13 bankruptcy. However, in any instance, deciding what to do with your car loan can be tricky. 

Car loans, because they are secured debt, are not going to be included in a repayment plan nor are they going to be discharged for those filing chapter 7. After all, the car is collateral for the loan, so it would make no sense for the bankruptcy laws to allow you to just keep the car and not keep the debt. This means if you want to keep your car, you need to keep the loan too. The best and most common way to do this is to simply reaffirm the debt. This is just a fancy legal way of saying that you need to promise to pay, despite the fact you are declaring bankruptcy. 

You will of course, then have to actually pay the car loan back according to the terms of the original loan (or, if you can get your lender to agree to modify the terms, according to the modified terms). Hopefully, taking care of your other debts in bankruptcy will give you the room in your budget necessary to get back on track with that car loan and start paying it. 

A good lawyer can also help you to decide what your best course of action is regarding your car loan and bankruptcy.