If you’re thinking about filing a bankruptcy petition you may be concerned about whether or not you can keep your car or any other property. This is frequently not the case that you will lose all of your property by filing for bankruptcy. Exemption laws within your state entitle you to exempt some property in bankruptcy. These include a modest vehicle in the form of a van, truck, motorcycle or car.
You need to understand how each state’s motor vehicle exemption apply directly to your case. So, consult with an experienced bankruptcy attorney to identify how the state laws will affect you. Chapter 7 bankruptcy will wipe out your unsecured and non-priority debts including personal loans, medical bills, and credit card bounces. You may be allowed to keep your car and certain items in order to keep working and maintain your household.
The majority of Chapter 7 filers are able to exempt all or most of their assets. In exchange for wiping out your qualifying debt, you will have to give up any nonexempt property. The trustee appointed in your bankruptcy will be responsible for selling this nonexempt property and using any proceeds to pay off the unsecured creditors. The first step in this process is determining the value of your vehicle.
Your vehicle is valued at the amount that you could sell given its current condition as well as its age. You can get an idea by looking at the Kelley Blue Book. Once you know the value of your value, you need to determine the equity you have in it. If you do not have a car loan and own your car outright, the equity in the car is the same as the car’s value. If your car loan is still active, the equity in the car refers to any funds left over after selling the vehicle and paying down the loan.
The next step is to identify how much equity your state will allow you to keep, also known as the exemption amount.
Every state has a different set of rules associated with allowing you to protect your belongings including equity inside a vehicle. These amounts can vary widely, however. The trustee will frequently abandon the car in your bankruptcy case if there will not be money available for creditors following a sale.
The trustee has to pay off the loan, the amount of your exemption, the cost of sale and the commission whenever he or she sells the property. If nothing or very little is left after all these deduction and expenses, the trustee is not likely to sell the car. Instead, the trustee will most likely abandon it meaning that you are able to keep it. In certain situations, the trustee may also enable you to purchase your car back again.