Most consumer Chapter 7 filers keep their car. The trustee only takes a vehicle when the equity in it substantially exceeds your state's motor vehicle exemption, which doesn't happen often because most cars have very little equity by the time someone is filing bankruptcy.
Equity equals value minus the loan balance. If your car is worth $14,000 and your loan balance is $13,000, you have $1,000 of equity. The motor vehicle exemption in your state determines whether that equity is protected. Under the federal Bankruptcy Code (11 U.S.C. § 522(d)(2)), the motor vehicle exemption is $4,450 per debtor (2026 figure, doubled to $8,900 for married couples filing jointly).
State exemptions vary. California offers two systems and the higher-equity option protects up to $7,500 of vehicle equity. Texas protects one car per licensed driver in the household, no dollar cap. New York protects $4,825 of vehicle equity. Florida protects $1,000. About a third of states let you pick between the federal exemptions and the state list; the other two-thirds require the state list.
You also get the wildcard. The federal wildcard exemption under 11 U.S.C. § 522(d)(5) is $1,475, plus up to $13,950 of unused homestead exemption applied to any property. If you don't own a home or your homestead equity is small, the wildcard can stack on top of the motor vehicle exemption to protect a much larger amount of vehicle equity. Several states have similar wildcards.
If you have a car loan. Three options. Reaffirmation: you sign a new agreement with the lender confirming you remain liable on the loan after discharge. You keep the car as long as you keep paying. This is the most common path. Redemption: you pay the lender a lump sum equal to the car's current value (which can be less than the loan balance), and the loan is satisfied. You then own the car free and clear. Redemption is great when the loan is much higher than the car's value but you need the cash upfront. Surrender: you return the car to the lender, the lender sells it, and any deficiency on the loan is discharged in the bankruptcy.
If you own the car outright. No loan, no payments. The only question is whether your equity exceeds the exemption. If a car you own outright is worth $6,000 and your state exemption is $4,000, you have $2,000 of nonexempt equity. The trustee may take the car and sell it, give you $4,000 from the proceeds, and pay the rest to creditors, but only if the math nets enough after sale costs and trustee fees to make the effort worthwhile. For older, lower-value vehicles, the trustee usually abandons them.
What about a paid-off car worth $20,000? This is where Chapter 13 starts to make more sense than Chapter 7. In Chapter 7 with a $4,450 exemption you'd have $15,550 of nonexempt equity and the trustee would likely sell. In Chapter 13 you keep the car by paying creditors the equivalent of the liquidation value through the plan over 3 to 5 years, which is much easier to absorb than losing the vehicle.
Two vehicles. The federal exemption applies to one vehicle per debtor. A married couple filing jointly can stack their exemptions to cover two vehicles. Most states follow the same per-debtor rule, though Texas allows one per licensed driver in the household regardless of marital status.
910-day rule. If you bought your car within 910 days (about 2.5 years) before filing and the loan was used to purchase the vehicle, you cannot 'cramdown' the loan to the car's value in Chapter 13. You must pay the full loan balance through the plan if you keep the car. Cars purchased more than 910 days before filing can be crammed down to current value with the difference discharged as unsecured.
The honest summary. Most Chapter 7 filers keep their car by reaffirming the loan or, less often, redeeming. The exception is paid-off cars worth significantly more than your state's exemption, where Chapter 13 is often the cleaner solution.