It's one of my most frequently asked frequently-asked-questions on bankruptcy:

Can I keep my car?

Answer: maybe.

If the equity in the vehicle isn't too high, then you can keep it. It's rare that debtors filing for chapter 7 bankruptcy lose their vehicles, but we need to look at all your assets before giving you a thumbs-up response.

Suppose you want to maintain payments on your car and not wipe out the vehicle loan. In that case, can you just keep your car out of the bankruptcy?

Answer: no.

I often hear clients imply that there's a choice whether to include stuff in your bankruptcy. Nope. Everything goes into the bankruptcy. By everything, I mean every liability, even those you plan on assuming after the bankruptcy or wish to pay off. Listing your vehicle loan is an obligation. There's no omitting it. However, that doesn't mean you will lose it. Whether you'll keep your vehicle depends on your equity in the asset and your ability to maintain payments. It has nothing to do with whether or not it is "in" the bankruptcy.

After you petition is filed, the lender on your car loan will have to stop sending you statements. However, they would continue to accept your payments. If you'd like to keep your wheels without risking their loss, then you need to keep coughing up those car payments. The bankruptcy filing will only give you temporary relief if you are in default on the loan.

There is a provision in the Bankruptcy Code that would require debtors to reaffirm their secured loans. That means the lender will ask you through your attorney if you wish to reinstate your loan and assume the liability again notwithstanding your bankruptcy. In a sense, this defeats the whole purpose of the bankruptcy. It puts you back on the hook. Yet, if your budget reflects an ability to confidently repay the loan, then you may choose to reaffirm it. Your payment on the loan can appear on your credit report and help boost your credit post-bankruptcy.

However, it may be ill-advised or simply impossible to reaffirm a loan. If represented by counsel, you will learn whether a reaffirmation is in your best interest and whether it's necessary. If you choose to reaffirm, then your attorney will process it, but only if doing so would not impose upon you a so-called undue hardship. If not represented, then you would have to actually go before a United States Bankruptcy Judge and argue that you can afford to reaffirm the loan.

So: can you keep your car in bankruptcy? If you're smothered in debt, but concerned about your transportation, then contact us. When you call us up: the line's not engaged (if it is, we'll: A. pick up on the other line or B: we're out to lunch and will call you back in a jiffy. Though sometimes lunch is desk-side in the company of PB&J so we'll pick up anyway (If you have to know, the PB is Laura Scudders, not... Jif: my wife and son eat Jif, but I won't touch the stuff. the J is generic blackberry preserves).