Sometimes people wonder “Do I actually have to file on my house (or my car)?” And the answer is, well, yes, but basically you just gotta keep making the payments.
And the way to visualize this, is that before you file bankruptcy, it’s a three way relationship. There’s you, there’s your car, and there’s the bank. So, you can drive your car, you can converse with the bank, and in the event of a default the bank can take your car or they can sue you.
After you file bankruptcy that line of communication between you and the bank gets severed so the bank can no longer communicate with you but you are basically indirectly related through the car. If you get behind, they are just going to come take the car. So after the bankruptcy you can still make the payments, they will apply it to principal and interest and when you pay the whole thing off you will get your lien back.
This is what we call the retain option. It is what most people do. The nice thing about it is that if you ever default on the loan, you just give it back. They can’t come after you or sue you for any deficiency because you did technically file bankruptcy on it.