German YusufovApril 9, 2025

Many people worry they will lose their vehicle once they begin bankruptcy, which can add more pressure to an already stressful period. A car is often essential for daily travel in cities like Tucson, Mesa, or Phoenix.

Yusufov Law Firm PLLC has worked with Arizona clients and understands how vital it can be to keep a reliable car. Here, we will discuss how Chapter 13 bankruptcy may allow you to retain ownership of your vehicle while addressing your financial concerns.

Arizona Bankruptcy and Your Vehicle: An Overview

If you have heard that filing for bankruptcy automatically strips you of a car, that is not correct. Many individuals do keep their vehicles despite filing for bankruptcy in Arizona. The main factor is whether the vehicle’s equity falls within the exemption laws that protect property needed for daily life.

Arizona offers exemptions that can shield certain assets, including cars, from creditor claims. These exemptions are built to help you keep necessary property. With Chapter 13 bankruptcy, there is an added benefit: you follow a court-approved payment plan that can help address back payments on car loans in a structured way.

Arizona Motor Vehicle Exemption

If you have heard that filing for bankruptcy automatically strips you of a car, that is not correct. Many individuals do keep their vehicles despite filing for bankruptcy in Arizona. The main factor is whether the vehicle’s equity falls within the exemption laws that protect property needed for daily life.

Arizona offers exemptions that can shield certain assets, including cars, from creditor claims. These exemptions are built to help you keep necessary property. With Chapter 13 bankruptcy, there is an added benefit: you follow a court-approved payment plan that can help address back payments on car loans in a structured way.

Keeping Your Car in Chapter 13 Bankruptcy

Chapter 13 focuses on a repayment plan that usually extends over three to five years. The plan reworks your debts, which means you can include any missed payments on a vehicle loan. This approach may be suitable if you have fallen behind on your car note but want to catch up while keeping the car.

For secured debts like a car loan, Chapter 13 requires that you pay off the outstanding balance through the plan or arrange a repayment schedule that satisfies your lender. Throughout your plan, the automatic stay halts any repossession as long as you make plan payments on time. This legal barrier protects your vehicle, giving you breathing room to stabilize your finances.

Options for Managing Your Car Loan in Chapter 13

When filing under Chapter 13, you might have some additional avenues to deal with your car note based on how old the loan is and the current value of the car. Below are some ways a repayment plan could help:

  • Reducing the loan balance: If your took out the auto loan is older than at least 910 days from the original purchase date before the bankruptcy is filed, or if the loan it was refinanced after you bought the car, you might qualify to lower the amount owed to the vehicle’s current value.
  • Lowering the interest rate: In many instances, you can reduce a high interest rate to something more manageable, potentially saving you money over the life of the repayment plan.
  • Treating the car loan as a lease: Chapter 13 may let you include the car loan in your plan while keeping the option to surrender the vehicle at a later date if it becomes too burdensome.

These measures can ease the pressure of an expensive car note and help you reorganize your finances more effectively during Chapter 13.

Alternatives to Keeping Your Car

In certain circumstances, holding onto a vehicle is no longer beneficial. Some individuals decide that the cost of repairs or the car’s loan structure are not favorable, making surrender a better solution. By surrendering the car in Chapter 13, you remove the monthly payment obligation. If the vehicle is older or has mechanical problems, that might free up funds for more urgent expenses.

There is also a possibility of securing a new vehicle at improved terms once you are in Chapter 13 bankruptcy. For some, buying a different car with a more reasonable payment or fewer mechanical issues after the filing can be a wiser choice.

Contact Yusufov Law Firm for Guidance on Bankruptcy and Car Ownership

Figuring out whether you can keep your car in a Chapter 13 bankruptcy often includes reviewing exemptions, debt amounts, and personal goals. Yusufov Law Firm will help you protect what matters most while creating a roadmap to a stronger financial future..

If you would like more details about how filing Chapter 13 may affect your vehicle, call us at (520) 745-4429 in Tucson or (480) 788-0098 in Mesa/Phoenix, or visit our Contact Us page. We stand ready to work with you you to develop a plan that supports your life and keeps you moving forward on the road to stability.