How can I surrender my car in Chapter 7 bankruptcy?

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Written by Kristin Turner.  Reviewed by Andrea Wimmer, Esq.
Updated April 13, 2020

Summary

"Surrendering" your car means that you give it back to the lender that gave you the loan to purchase it. If you surrender your car as part of your Chapter 7 bankruptcy, any debt that you owe on it will be eliminated when you receive your bankruptcy discharge.

"Surrendering" your car means that you give it back to the lender that you financed it with. If you surrender your car, any debt that you owe on it will be forgiven when you receive your bankruptcy discharge.

If you would like to surrender your car, you must:

  1. let the bankruptcy court and the lender know on your Statement of Intentions,

  2. wait for the court to authorize the lender to repossess the car, and then

  3. make the car available for the lender to repossess. They can either come and get it from you or you can bring it to them at an agreed location. There is no hard and fast rule, but most creditors will try to repossess the car a few weeks after the court authorizes them to do so. The lender can also wait to pick up the car after the bankruptcy case has closed. Once the automatic stay no longer applies, the decision of when to pick up the vehicle is up to the lender.

If you would like to learn more about the pros and cons of surrendering your car during bankruptcy, check out this article. If you originally planned on keeping the car and reaffirming your obligation to pay the loan but changed your mind, take these steps to make sure you're fully protected.

What you choose to do with your car in your bankruptcy is entirely up to you, and a choice that made sense for someone else may not make sense for you. We at Upsolve do not recommend any particular way forward, but we hope that this article and others we have written on the topic of secured debt gives you the tools you need to make an informed decision.

About the authors

Andrea Wimmer, Esq.

Andrea practiced exclusively as debtors’ counsel in consumer chapter 7 and 13 cases for more than 10 years before joining Upsolve, first as a contributing writer and editor and ultimately joining the team full time in August 2019. While in private practice, Andrea handled all ban... read more

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Upsolve is a 501(c)(3) nonprofit that started in 2016. Our mission is to help low-income families who cannot afford lawyers file bankruptcy for free, using an online web app. Spun out of Harvard Law School, our team includes lawyers, engineers, and judges. We have world-class funders that include the U.S. government, former Google CEO Eric Schmidt, and leading foundations. It's one of the greatest civil rights injustices of our time that low-income families can’t access their basic rights when they can’t afford to pay for help. Combining direct services and advocacy, we’re fighting this injustice.

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