Call Today For Your Strategy Session: (303) 990-5308

Can I Keep My Car if I File Chapter 7 Bankruptcy in Colorado?

Many people are afraid of filing a Chapter 7 bankruptcy because of the presumption that it will cause them to lose their valuable assets, including their houses and their cars. This is actually not too far-fetched, considering that Chapter 7 bankruptcy involves the liquidation of your assets to retrieve the money that will be used to settle your debts.

A car is probably one of the things that a Chapter 7 trustee will start looking into liquidating. But actually, a lot of people whose priority is to keep their car in bankruptcy are able to do so. Ultimately, whether or not you get to keep your car in a Chapter 7 bankruptcy depends on the decisions and actions of three key players: you, your trustee, and your lender. Many residents opt to speak with an experienced Denver bankruptcy lawyer so they know all of their options. These three people are focused on the following questions:

  • Do you want to keep your car? 
  • Do you have equity in your car? 
  • Are you current on your payments for the car? 

Do you want to keep your car? 

When filing for Chapter 7 bankruptcy, the first thing that you have to consider is your goals. You need to be clear on what you want to achieve out of the bankruptcy, particularly the assets you are looking to keep. Those who can set their priorities as to what assets they want to protect can conduct specific strategies to help them do so.

The first question is whether or not you want to keep your car. But it’s not as simple as a yes or a no. You also have to consider if you are still able to afford your car in the long run. Do you still owe an amount that is greater than the car’s worth? Have you accrued burdensome interest rates? 

If you answered yes to these two questions, you might be better off having your car liquidated by your trustee. This will help you start anew, without the added burden of settling your car payments. You can always repurchase your vehicle or get a new one after your financial situation gets better. 

Do you have equity in your car? 

When you file for Chapter 7 bankruptcy, you will get a trustee who will be in charge of reviewing your financial records, taking a look at your assets, liquidating them, and paying off your creditors. One of the assets that your trustee will be looking into is your car, particularly whether or not you have any equity in it. 

If you have equity in your car that is protected by Colorado’s State exemptions, you will be able to keep your car since the trustee will more than likely not be interested in it. But if your equity is non-exempt, the trustee may advise that your car be included in the bankruptcy estate. 

Some trustees will allow a setup wherein you can buy back your car from your bankruptcy estate. Although it’s an attractive offer at first glance, you should consult your lawyer to protect your interests. 

Are you current on your payments for the car?

If you are current on your payments and you don’t have any problems with your creditor, then you will most likely be able to keep your car despite your Chapter 7 bankruptcy. But if you have been delaying your payments, your creditor can influence whether you can keep the vehicle. 

When it comes to working with the creditor for your car, there are three options that you can consider: 


In Chapter 7 bankruptcy, your dischargeable debt will be eliminated, and this includes any outstanding balances for your car. However, you can enter into a reaffirmation agreement with your creditor and get the judge to waive the discharge of your debt on your car. The result is that your loan will still exist and you should continue making payments on your car.  

Ride Through

If you or your creditor do not want to enter into a reaffirmation agreement, you can opt to ride through. In this setup, the loan will still exist and you can continue making payments on the car despite your bankruptcy. This is a matter to be discussed with your creditor. But it’s important here that you stay current on your payments. Otherwise, the creditor can repossess the car. 


Another option is to surrender the car. You can do this on your own volition or the lender can enforce it. Surrendering the vehicle is a good option if you know that you will no longer be able to afford payments or you’ve accrued excessive interest due to your delay. Surrendering is also advised if you do not agree with the reaffirmation terms of your creditor. 

If your priority is to keep your car, a lawyer can help you create a sound strategy that will meet your goals. Speak to a lawyer before filing for Chapter 7 bankruptcy so that you are aware of your options.

How can we help?

We have your back.

Speak with our experienced legal team who inspire, inform, and work hard to win for you.


Partner - Domestic Relations