Many people need a car for work, school runs or caring responsibilities. Bankruptcy law allows you to keep items you need, within reason.
The short answer
- A car needed for work or essential family use can usually be kept.
- If it’s valuable, the trustee may sell it and allow a cheaper replacement.
- Cars on HP or PCP belong to the finance company, not you.
- Adapted or Motability vehicles are treated differently.
- There’s no fixed value limit. The trustee decides what’s reasonable.
When can I keep my car?
Tools and vehicles you need for your job or business, and items needed for basic domestic needs, are generally exempt. A modest car used to get to work, take children to school or care for someone will often be kept.
What if my car is worth a lot?
If your car is worth more than a reasonable replacement, the trustee may sell it and give you enough to buy a cheaper one that still meets your needs.
What about car finance?
If the car is on hire purchase or PCP, it belongs to the finance company. The lender may want the car back if you stop paying. Some lenders let you keep paying as normal. See car finance debt help.
What about a DRO or IVA?
A DRO has a vehicle value limit of £4,000. See DROs and cars. In an IVA, a modest car is usually kept. See buying a car during an IVA.
Common questions
Can I buy a car while bankrupt?
You can, but you can’t borrow more than £500 without telling the lender you’re bankrupt, which makes finance difficult.
Will the Official Receiver take my car?
Only if it’s worth more than a reasonable replacement, or not needed. Most modest cars are kept.
What if my car is in my partner's name?
If it genuinely belongs to your partner, it isn’t part of your bankruptcy.
Getting help
You don’t have to deal with debt on your own. Free, impartial advice is available from MoneyHelper, StepChange and National Debtline. If you want to talk through whether a formal solution such as an IVA could be suitable, you can also get in touch with us.