Can You Keep Your Car if You File for Bankruptcy in Alabama or Mississippi?

A practical guide to protecting your vehicle while getting financial relief.

For most people in Alabama and Mississippi, a car isn’t just a luxury—it’s a lifeline. It gets you to work, takes the kids to school, and helps you manage the daily essentials of life. So it's no surprise that one of the most common concerns we hear at the Bond & Botes Law Offices is this:

“If I file for bankruptcy, will I lose my car?”

Fortunately, the answer is usually no. In many cases, bankruptcy can help you not only keep your vehicle but also make the loan more manageable. Let’s walk through how that works.

Timing Is Everything When It Comes to Repossession

If you're behind on your car note, the lender may be gearing up to take it back. But once you file for bankruptcy, something called the 'automatic stay' goes into effect. That stay stops most collection actions in their tracks—including repossession.

The catch? It only works if you file before the car is actually repossessed. After that, getting it back becomes much harder, even with a bankruptcy case pending.

What Happens to My Car in Chapter 7?

Chapter 7 is designed to wipe out unsecured debt like credit cards and medical bills. But what about your vehicle?

Here’s what to know:

• If you’re up to date on your loan: You can often keep the car by 'reaffirming' the loan—basically agreeing to keep making payments as you were before.
  

• If you’re behind: Chapter 7 might not offer enough time to catch up. The lender could still repossess unless you quickly bring the account current.
  

• Equity and exemptions: Both Alabama and Mississippi allow a certain amount of equity in your car to be protected. If your vehicle’s value is within those limits, it’s typically safe.

Behind on Payments? Chapter 13 Might Be the Better Fit

If you're struggling to keep up with your car loan, Chapter 13 might offer the breathing room you need. This type of bankruptcy lets you repay what you owe over three to five years through a court-approved plan.

With Chapter 13, you may be able to:

• Catch up on missed car payments

• Lower your interest rate

• Reduce the balance owed if the loan is over 910 days old

• Stretch out the loan over a longer period, lowering your monthly bill

What If I Have a Title Loan?

Title loans are common in the South—and they’re often trouble. With sky-high interest rates and short repayment terms, they can lead to a cycle of debt.

Bankruptcy can help by halting repossession and, in some cases, restructuring the loan into your repayment plan. Learn more here.

Let’s Work Together to Protect What Matters

At Bond & Botes, we’ve been helping clients across Alabama and Mississippi for over 30 years. We know how important your vehicle is, and we’re here to help you hold on to it while getting the financial relief you need.

We offer confidential consultations—by phone, in-person, or video—and we’ll take the time to talk through your situation and options.

Take Action Before It’s Too Late

If you're worried about losing your car, don’t wait. The sooner you speak with an attorney, the more we can do to help.

Give us a call or reach out online to schedule your free consultation.

Phone: 877-581-3396

Email: https://www.bondnbotes.com/contact-us/

Website: https://www.bondnbotes.com/

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