June 30, 2025 By:
When you file for protection under U.S. bankruptcy law, you’ll immediately be protected by what’s known as the automatic stay. The automatic stay prevents your creditors from calling, writing, or taking legal action to recover a debt, except through the bankruptcy process. It’s important to understand, though, that the automatic stay applies only prospectively—it will not allow you to get back your car if it was repossessed before you filed for bankruptcy.
With a Chapter 7 filing, you can permanently extinguish debt in exchange for the relinquishment of non-exempt property. Texas has the most generous exemptions in the nation, which typically means that you can claim an exemption for the full value of a car for each licensed driver in the home. The exemption, though, only prevents the bankruptcy trustee from selling the car—it doesn’t eliminate the car loan lender’s lien on the car. So if you’re behind on your car payments, the lender may ask the bankruptcy court to lift the stay so that it can repossess your car.
Also, in a Chapter 7 bankruptcy, you may enter a reaffirmation agreement in which you renew your promises to make your car payments. If you fail to honor the reaffirmation agreement, your car can be repossessed.
With a Chapter 13 petition, you generally get to keep all your assets and make new payment arrangements with your creditors. Your car will typically be protected as long as you make the agreed payments. If you fail to honor your repayment agreements, the bankruptcy may be terminated and the automatic stay will go away.
At the Law Offices of Carrie Weir, all potential clients are entitled to a free initial consultation. To arrange an appointment to discuss your rights and options in bankruptcy, contact my office online or call 972-772-3083. I handle Texas personal bankruptcy filings in Kaufman County, Rockwall County, Collin County, Dallas County, Hunt County, and the surrounding counties.
