In many cases, you can keep your car if you file for bankruptcy in Illinois. However, the outcome depends on the type of bankruptcy you file, how much equity you have in the vehicle, and whether you are current on the loan. This question matters to many families because cars are often essential for work and daily life.
As of 2026, vehicle debt is still a big issue for many Americans. Auto loan balances nationwide remained above $1.6 trillion in 2025. That debt will come up in a bankruptcy case. Our Naperville, IL bankruptcy lawyer can help you understand how Illinois exemptions and bankruptcy rules apply to your situation.
How Does Chapter 7 Bankruptcy Affect My Car in Illinois?
In a Chapter 7 bankruptcy, the court looks at whether your car is protected by exemptions. Illinois allows a motor vehicle exemption under 735 ILCS 5/12-1001(c), which protects up to a certain dollar amount of equity in a vehicle. Equity is the difference between what the car is worth and what you owe on it.