Can I Keep My Car If I File Bankruptcy in Washington?
The thought of filing bankruptcy is stressful enough, wondering if you’ll lose your car on top of that can feel overwhelming. For many Washington residents, a vehicle isn’t a luxury; it’s how you get to work, take kids to school, and live your daily life.
The good news: bankruptcy does not automatically mean losing your car. In many cases, you can keep it. In other situations, giving the car back and wiping out the debt is actually the smarter move. At Symmes Law Group, we help Washington consumers decide which path makes sense for their situation, not just whether we can save the car, but whether it’s worth saving in the first place.
What Happens to Your Car When You File Bankruptcy?
Whether you can keep your car depends on a few key questions:
- Are you current or behind on payments?
- How much is the car worth today?
- How much do you still owe?
- Is your loan interest rate very high (15 – 20% or more)?
- Do you want to keep this car long-term, or is it a financial burden?
Bankruptcy is a financial tool, not a penalty. It can help protect your vehicle, stop collection actions, and wipe out auto loan deficiencies or other unsecured debts. The best strategy is different for everyone. Some people keep their car through bankruptcy; others choose to let it go so they can move forward without a costly, overwhelming loan.
Option 1: Keeping Your Car in Bankruptcy
If your goal is to keep your vehicle, bankruptcy can provide several paths to make that work. The simplest is when you’re current on the loan or only slightly behind. In these cases, continuing to make the payments, even after filing Chapter 7, is often enough to keep the car. Some borrowers choose to reaffirm the loan and continue under the same contract, while others simply keep paying without a formal reaffirmation depending on the lender’s requirements and their long-term strategy.
This approach works best when the payment is sustainable and the loan balance actually makes sense for your budget.
Another option is Chapter 13, which is a structured repayment plan lasting 3 – 5 years. Filing Chapter 13 puts an immediate stop to repossession and gives you time to catch up on past-due payments gradually rather than all at once. In some cases, it can also:
- Reduce a high interest rate
- Adjust the payoff to reflect the car’s current market value (if the loan is more than 910 days old)
Those benefits can significantly lower the monthly payment. But Chapter 13 only succeeds if the overall plan is affordable. You must be able to maintain your living expenses and stay on track with every plan payment for the full term. For many people struggling with the car payment already, extending that financial stress over several years isn’t the best solution.
That’s why we carefully review your budget before recommending Chapter 13. Keeping the car is only a win if it also supports your long-term financial health.
Option 2: Giving the Car Back and Wiping Out the Debt
For many Washington consumers, the car loan itself has become the problem, the payment is too high, the interest rate is steep, or the vehicle is constantly in the shop. If the car is worth significantly less than what’s owed (a common issue today), trying to keep up can feel like throwing money into a bottomless pit.
In those situations, letting the car go may be the financially smart choice.
Chapter 7 bankruptcy allows you to do exactly that. It lets you surrender the car and:
- Wipe out the remaining loan balance
- Eliminate any deficiency the lender tries to collect after auction
Instead of draining your resources to save a car that isn’t serving you anymore, Chapter 7 can free up income for essentials and give you room to recover. Many clients find that once the burden of an unaffordable auto loan is gone, they can rebuild their credit and eventually secure a more reliable, budget-friendly vehicle on their own terms.
In the end, the right choice isn’t just about whether the car can be saved, it’s whether it should be.
4 Warning Signs Your Auto Loan Is No Longer Working for You
Whether it’s the holidays or any other time of year, these are red flags that your auto loan may be unsustainable:
- You’re juggling which bills to pay every month
If you’re constantly choosing between the car payment, rent, and essentials, the loan is a problem. - Your loan balance barely goes down
High interest rates can turn your payment into a black hole. You pay and pay, but the principal barely moves. - Your car is worth much less than you owe
This is negative equity. It makes it hard to sell or refinance and often means you’re throwing good money after bad. - You’re worried the repo truck might show up
Repossession efforts don’t wait for “the right time.” If you’re consistently behind, the risk is real.
If any of these sound familiar, it’s time to talk through your options, not just how to keep the car, but whether you should.
Why Timing Still Matters (Even If You’re Unsure What You Want to Do)
When a car loan starts slipping behind, the situation can escalate faster than most people expect. Repossession can happen quickly, and lenders don’t always issue multiple warnings before they act. At the same time, late fees and high interest continue to build, making the balance even harder to catch up on. Many borrowers dip into credit cards or emergency funds to try to stay afloat, but that often just delays the stress, and makes long-term financial recovery harder.
Speaking with a bankruptcy attorney early, before the problem snowballs, gives you more choices and more control, whether your best path forward is protecting a car you rely on or freeing yourself from a loan that no longer makes sense.
Worried About Your Car and Thinking About Bankruptcy?
You shouldn’t have to lose sleep wondering whether you can keep your car if you file. The answer depends on your unique numbers, your priorities, and the type of bankruptcy you qualify for. If you live in Washington and you’re behind on payments, upside-down on your auto loan, or worried a repossession truck may show up any day, now is the time to understand your options.
At Symmes Law Group, we’ll help you determine whether keeping the vehicle makes sense, whether giving it back will free up your budget, and whether Chapter 7, Chapter 13, or even no bankruptcy at all is your best path forward.
You don’t have to navigate this alone, and you don’t need to stay stuck with a car loan that’s pulling your finances down. Reach out to Symmes Law Group here today, and get the clarity you deserve before things reach a breaking point.
