It depends. You can generally keep it if you want to keep the loan too. You may lose it if it is worth too much.
I will try to break down what happens when your car is secured/unsecured, and whether or not it has equity.
secured……….Your car has a loan on it.
unsecured……Your car is free and clear (with no loan on it).
equity ………….Value of your car.
Chapter 7 Bankruptcy
Secured (your car has a car loan), but upside down on the loan.
Keep it…If your car has a loan against it, you can list the loan in bankruptcy and then check a box that says “reaffirm.” This means that you’ll keep the car loan with the same payments/interest rate/balance/etc.
I have discussed this here:
Do I have to reaffirm my car loan to keep my car?
Is there any way to keep my car loan out of bankruptcy?
Surrender it…If your car has a loan against it and you want to surrender the car, then you return it to the bank and wipe out the remaining balance of the loan.
Secured, but your car has equity above the loan.
You can still reaffirm and keep the car, but, Utah law only lets us protect $3,000 of equity in a vehicle for each spouse, or a combined $6,000 of equity in a single vehicle if both spouses are on the title.
If you have more than $3,000 (or $6,000) of equity, the trustee may sell your car off to pay creditors. I have covered this here:
More on car valuation and bankruptcy: will the trustee reduce the value of my car based on the repairs it needs?
You own your car free and clear. If it is less than $3,000 in value, you will not lose it. Just remember that we can protect one car for husband up to $3,000 and one for wife up to $3,000 or a single $6,000 vehicle if both spouses are on title.
Same analysis, but, the chapter 13 trustee will generally object if you try to keep more than 2 vehicles for a family or try to keep a luxury vehicle.
Just remember that in a Chapter 13, we can stretch out the car loan to 60 months and change the interest rate to 5%. We can also get a repossessed car back and catch up on missed payments.
Related articles on cars and bankruptcy:
How does the bankruptcy trustee determine what my car is worth?
My car was repossessed last night. How quickly can you get it back in bankruptcy?
Is there any way to get my co-signed parents off of my car loan in bankruptcy?
What happens to the title loan on my car when I file bankruptcy?
What happens to my car in bankruptcy if I have negative equity?
What happens to my car loan interest rate in bankruptcy?
My parents are co-signed on my car loan. What happens to them if I file bankruptcy?
I am behind on car payments but don’t want to lose my car, can bankruptcy stop repossession and let me catch up?
Can I face criminal charges if I don’t turn over a vehicle that a creditor wants to repossess?