- October 29, 2025
- Kelvin Birk
- Bankruptcy
People in Missouri who think about bankruptcy often wonder about their vehicles. A car represents more than just transportation. It provides access to work, school, medical care, and family responsibilities. Without it, daily life becomes much harder. The question many people ask is, can you keep your car in Chapter 7 or Chapter 13 bankruptcy?
Bankruptcy law includes exemptions that let you keep certain property. Missouri residents benefit from specific rules that shield some vehicle equity. These exemptions work differently depending on whether you file under Chapter 7 or Chapter 13. The outcome also depends on the value of your car, how much you owe on it, and whether you can afford ongoing payments.
An experienced bankruptcy attorney with knowledge of Missouri law can review your case, explain your rights, and focus on strategies that give you the strongest chance to keep your vehicle. If you’re struggling with debt and worried about losing your car, contacting a bankruptcy lawyer near you for a free consultation can give you clear direction and hope.
Key Takeaways Involving Bankruptcy Exemptions
- Missouri’s motor vehicle exemption allows you to protect up to $3,000 in car equity during bankruptcy
- Chapter 7 offers faster debt relief but may require surrendering vehicles with significant equity
- Chapter 13 provides more flexibility to keep your car through a repayment plan, even with higher equity values
- Reaffirmation agreements in Chapter 7 can help you keep financed vehicles if you can maintain payments
- Strategic timing and proper exemption planning can maximize your ability to retain essential transportation
Understanding Bankruptcy and Vehicle Ownership in Missouri
Bankruptcy doesn’t mean giving up everything. The law balances debt relief with the ability to maintain basic needs. A car often falls into this protected category. Still, how your vehicle is treated depends on the chapter you file, the value of your equity, and how your debts are classified.
What Are Your Rights to Keep Property in Bankruptcy?
Bankruptcy exemptions are rules that let you protect certain property from being sold to repay creditors. In Missouri, state exemptions apply, not federal ones. This means you must follow Missouri’s guidelines on what property you can keep.
How Does Missouri’s Motor Vehicle Exemption Work?
Missouri law lets you protect up to $3,000 in vehicle equity. Equity means the value of your car minus what you still owe on it. If your car is worth $8,000 and you owe $6,000, your equity is $2,000, which fits within the exemption.
What’s the Difference Between Secured and Unsecured Auto Debt?
- Secured debt means the loan is tied to the car. If you don’t pay, the lender can repossess it.
- Unsecured debt means the loan isn’t tied to property. Credit card debt is a common example.
- Most vehicle loans are secured, so how you treat the debt in bankruptcy matters.
Can You Keep Your Car in Chapter 7 Bankruptcy?
Chapter 7 bankruptcy wipes out many debts in a few months, but it also involves selling non-exempt assets. Cars with little or no equity may not be touched, but those with high equity above $3,000 could be at risk.
What Happens to Your Vehicle in Chapter 7?
The bankruptcy trustee reviews your property and exemptions. If your car has equity under the exemption limit, you keep it. If equity exceeds the limit, the trustee could sell the car, pay off the loan, give you your exempt amount, and use the rest for creditors.
When Can You Use Missouri’s $3,000 Vehicle Exemption?
You can always use it, but it only covers up to $3,000 of equity. If your vehicle equity stays below that figure, the exemption protects it fully.
What Are Reaffirmation Agreements and How Do They Work?
A reaffirmation agreement is a contract you sign during Chapter 7 that says you’ll keep making payments on your car loan. The court must approve it, and you’ll remain responsible for the loan even after bankruptcy. If you miss payments later, the lender can still repossess the car.
What If Your Car Has No Equity or Is Worth Less Than You Owe?
If your car loan exceeds the vehicle’s value, you can usually keep it if you keep paying. Sometimes, people choose to surrender the car, wipe out the loan, and look for a more affordable vehicle later.
How Does Chapter 13 Bankruptcy Affect Your Vehicle?
Chapter 13 works differently. Instead of selling assets, you commit to a repayment plan that lasts three to five years. This approach often gives car owners more ways to keep their vehicles.
What Are the Advantages of Chapter 13 for Car Owners?
Chapter 13 allows you to catch up on missed payments over time. Even if your car equity is above the exemption, you can keep the car by including it in your repayment plan.
How Can You Catch Up on Past Due Car Payments?
Missed payments don’t automatically cost you your vehicle in Chapter 13. You roll the past-due amounts into your repayment plan and spread them out, which makes catching up more manageable.
What Happens to Vehicle Loans in a Chapter 13 Repayment Plan?
You’ll make monthly payments to the trustee, who distributes them to your creditors. Your car loan can be restructured, lowering interest rates and stretching repayment over more years.
Can You Reduce Your Car Loan Balance Through Chapter 13?
Yes, through a process called a “cramdown.” If your car is worth less than the loan balance and you purchased it more than 910 days ago, you can reduce the loan to match the car’s value. The rest of the balance becomes unsecured debt, which may be discharged at the end of the case.
Calculate Your Vehicle Equity Before Filing
Knowing your equity helps you see whether exemptions cover your vehicle and whether Chapter 7 or Chapter 13 fits your needs.
Why Vehicle Equity Matters in Bankruptcy
Equity determines if your trustee views the car as valuable to creditors. Higher equity increases the risk of sale in Chapter 7 but doesn’t block protection in Chapter 13.
How to Determine Your Car’s Current Market Value
Check resources like Kelley Blue Book or NADA guides. Compare listings for cars with the same make, model, year, and mileage.
Understanding Loan Balances and Liens
Subtract the loan balance from your car’s value. If a lien exists, remember that it gives the lender legal rights to repossess the vehicle if payments stop.
Consider Timing Your Bankruptcy Filing
When you file can affect the outcome for your car.
How Recent Car Purchases Affect Your Case
If you bought your car within the last few months, the loan balance is probably close to the car’s value. This often means little or no equity, making it easier to protect under exemptions.
Why Waiting Might Benefit Your Situation
Delaying filing until the loan balance falls or the car depreciates further may create a better equity position. Sometimes, patience gives you stronger protection.
Strategic Considerations for Vehicle Depreciation
Cars lose value quickly in the first few years. Timing your bankruptcy to reflect that depreciation can sometimes strengthen your case for keeping the vehicle.
Explore All Available Exemptions
Missouri law includes more than just the motor vehicle exemption. Using multiple exemptions together can help protect your car.
Using Missouri’s Wildcard Exemption for Additional Protection
The wildcard exemption lets you protect up to $600 of any property. You can apply this to a vehicle if your motor vehicle exemption isn’t enough.
Combining Federal and State Exemption Options
Missouri requires you to use state exemptions, but you might also find ways to combine them with federal non-bankruptcy exemptions, such as protections for certain benefits.
Planning for Married Couples Filing Together
If you and your spouse both file, you may double certain exemptions, giving you more protection for vehicles owned jointly.
Special Considerations for Missouri Residents
Missouri’s rules differ from other states, and local court practices can influence your case.
How Missouri Law Differs from Federal Bankruptcy Rules
Federal exemptions offer higher vehicle protection, but Missouri requires its residents to use state exemptions. That means your strategy must work within the $3,000 limit.
Understanding Local Court Practices and Procedures
Different districts in Missouri may handle reaffirmation agreements or cramdowns slightly differently. Skilled local attorneys understand these practices.
Working with Missouri-Licensed Bankruptcy Attorneys
A Missouri-licensed bankruptcy lawyer can use local knowledge to create strategies that maximize exemptions and reduce risks.
How Our Attorneys Can Help
Bankruptcy law includes many technical details. Our skilled attorneys at Birk Law Firm provide the support and analysis you need to protect your vehicle.
Comprehensive Vehicle Equity Analysis
Determining how much equity you have in your vehicle is the first step in figuring out whether you can keep it. Our attorneys use accurate methods to assess your car’s fair market value, review your loan documents, and calculate equity.
Strategic Bankruptcy Chapter Selection
Choosing between Chapter 7 and Chapter 13 can mean the difference between keeping or losing your car. Our attorneys help you weigh the benefits of each.
Exemption Planning and Maximization
Choosing the right chapter can mean the difference between losing a car and keeping it. A skilled attorney from our firm doesn’t simply tell you which option to take but explains the impact of each choice.
Exemption Planning and Maximization
Missouri law includes exemptions beyond the vehicle allowance, and our attorneys know how to combine them for maximum protection. Married couples filing together may also double certain exemptions, and lawyers make sure every possible protection is used. This type of detailed planning gives you the best chance of keeping property that matters most.
Reaffirmation Agreement Negotiation
Reaffirmation agreements in Chapter 7 let you keep a financed vehicle if you agree to continue making payments. These agreements come with risks, because they restore your responsibility for the debt even after bankruptcy. Our attorneys review the terms, ensure they’re fair, and negotiate with lenders sometimes to lower interest rates or adjust payment schedules. Without legal review, you might lock yourself into a deal that doesn’t serve your best interest.
Protection Against Vehicle Repossession
When lenders move to repossess a vehicle, bankruptcy can stop the process immediately through the automatic stay. Our attorneys act quickly to file your case, notify creditors, and secure your rights under the law. In Chapter 13, they build a repayment plan that allows you to catch up on missed payments over time instead of losing your car. Having a lawyer who understands Missouri courts means you won’t face creditors alone.
Frequently Asked Questions About Missouri Bankruptcy Exemptions
What happens if my car is worth more than Missouri’s $3,000 exemption?
In Chapter 7, the trustee could sell it unless you use other exemptions or reaffirmation. In Chapter 13, you can keep it by paying into your repayment plan.
Can I keep multiple vehicles in bankruptcy?
Yes, but exemptions apply separately to each car’s equity. Having two cars doesn’t automatically mean you lose one, though protecting both may require careful planning.
What if I’m behind on my car payments when I file?
Chapter 7 might lead to repossession if you can’t catch up quickly. Chapter 13 lets you roll the missed payments into your plan.
How long does the bankruptcy process take, and when will I know if I can keep my car?
Chapter 7 usually finishes within four to six months. Chapter 13 lasts three to five years, but you’ll know early on whether your plan protects your car.
Can I buy a new car while my bankruptcy case is pending?
Buying a new car during bankruptcy requires court approval and trustee involvement. It’s possible, but you must show the purchase is necessary and affordable.
What if I have multiple car loans?
Each car loan is treated separately in bankruptcy. You can use exemptions for each vehicle’s equity, but protecting multiple cars may require more complex planning, especially in Chapter 7. Chapter 13 often provides more flexibility to manage multiple car loans through a consolidated repayment plan. Your attorney can help you determine the best strategy for your specific situation.
Let Our Experienced Bankruptcy Lawyers in Missouri Help
Birk Law Firm provides skilled, knowledgeable guidance for Missouri residents filing for bankruptcy. Our attorneys focus on protecting your property, including vehicles, through thoughtful exemption planning and strong advocacy. When debt threatens your ability to keep your car, our team uses years of experience to build a path forward that protects your financial stability.
Contact Birk Law Firm today at 573-332-8585 for a free and confidential consultation. Our attorneys will review your situation, explain your rights, and work with you on a strategy that fits your goals while giving you the best chance of keeping your car.
Attorney Kelvin Birk
Kelvin Birk is a lawyer as well as a certified public accountant, with more than 30 years of experience in accounting and tax and business consulting, and more than 20 years of experience in numerous legal matters. This combined expertise allows our law firm to provide a level of service above that of other firms. Whatever your legal situation, your attorney at Birk Law Firm can counsel you as to the tax implications. We have experience in providing myriad legal representation services to residents of southeast Missouri and other areas.. [ Attorney Bio ]
