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Car Insurance During Chapter 13 Bankruptcy

Car Insurance During Chapter 13 Bankruptcy

: Richard West Law Office

Filing and receiving a Chapter 13 bankruptcy discharge has many moving parts. In fact, filing Chapter 13 bankruptcy when you own a large amount of property and have several forms of income can become downright complicated. Hiring a Chapter 13 bankruptcy can alleviate a number of concerns just by having a bankruptcy legal expert to advise on the minor minutia of your bankruptcy case. What happens to car insurance during Chapter 13 bankruptcy is an excellent question for those considering filing for bankruptcy protection. Car Insurance is a minor concern among the other parts of bankruptcy but certainly holds some weight.

Keep Your Car Insurance

Car Insurance is undoubtedly an expense during bankruptcy and will be factored into the payments you must make every month during the course of a Chapter 13 bankruptcy.

The US Bankruptcy Court will require you to retain insurance on all property, including motor vehicles. Bankruptcy Rules notwithstanding, you never want to let your auto insurance lapse, as it opens you up to any creditor being allowed to repossess the vehicle if you are required in your financing agreement to keep comprehensive insurance. Alternatively, your auto loan provider may take steps to take out an insurance policy for the vehicle and take on the extra costs to your loan amount. This is a more likely outcome for most people as it is easier for a bank or auto loan provider to do this versus take steps to repossess the property.

Your Insurance May Increase During Bankruptcy

Filing for bankruptcy may very well increase the cost of your insurance rates. Insurance companies look at your credit as a factor for assessing your risk to insure. Therefore, once you file bankruptcy, your insurance carrier may increase your rates.

Alternatively, you may be able to switch car insurance to a company that doesn’t require a credit check. These insurance companies sometimes advertise themselves as car insurance policies for poor credit drivers.

Can I Change Car Insurance?

This may sound like a silly question, but once you have confirmed your Chapter 13 repayment plan you have to ask the bankruptcy trustee, or in some instances a Bankruptcy Judge to let you carry out certain actions that affect your finances. Chapter 13 bankruptcy can last up to five years and so there is a likelihood that you will have to approach the bankruptcy court due to a life change that wasn’t present when you originally filed for bankruptcy. These actions that require permission are obtaining new auto loans, refinancing your house, or taking on any new forms of debt.

Still, other activities, such as changing jobs or changing insurance carriers don’t necessarily require court approval, but it may be a good idea to check with your bankruptcy attorney in Dayton before making the change. Some bankruptcy lawyers side on the decision to err on the side of caution and disclose changing insurance companies.


If you are struggling with finances and could have your vehicle repossessed, filing for bankruptcy protection can temporarily stop collection and repossession proceedings. Contacting your local bankruptcy lawyer can help you navigate relieving your debt via bankruptcy while stopping collectors and giving you the opportunity to reorganize your finances.