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Bankruptcy, Exemptions, And Multiple Vehicles: What You Need To Know

Bankruptcy, Exemptions, And Multiple Vehicles: What You Need To Know

: Richard West Law Office

When it comes to bankruptcy many people wonder what happens if you have more than one vehicle? Will the bankruptcy trustee seize any additional vehicles and liquidate these to pay off your creditors? Each bankruptcy case is different, because each will involve various factors, assets, and debts. Whether you file for bankruptcy under chapter 7 or chapter 13 of the bankruptcy code there are certain exemptions that are available to every filer. Sometimes there may be a choice between the available sets of exemptions, depending on the state where you reside. In some states residents can choose between the exemptions offered by the state or those offered by the federal government. Sometimes one set of exemptions may offer better protection for your property than another possible choice of exemptions.

 

 

 

Each set of exemption allowances will include a specific exemption amount for vehicles. The vehicle exemption will cover up to a specific amount of equity that is owned in a single vehicle, and this is allowed per petitioner in the case. This means that a married couple who file a joint bankruptcy petition are allowed double the exemption amount and this can cover the equity in two vehicles, one per person who is petitioning for bankruptcy. Another consideration is whether any of the vehicles owned are fully paid for or whether there are vehicles that you are still making payments on.

 

 

 

In addition to the vehicle exemption that each person filing bankruptcy is entitled to there is also a Wildcard exemption that is available, which can help protect multiple vehicles if you file for bankruptcy. The Wildcard exemption can be used towards any property that is not covered under the other available federal or state exemptions. If you own 2 vehicles and one is worth $1,500 and the other is worth $2,500 then it may be possible to keep both during bankruptcy if the allowable exemptions will cover $4,000 in equity. The state or federal vehicle exemption may cover $2,500 and the Wildcard exemption may cover some or all of the second vehicle value of $1,500. If you have a single vehicle valued at $3,000 and the exemption for a vehicle is $2,500 then you can use the Wildcard exemption to cover the remaining equity that you have.

 

 

 

If you are wondering if bankruptcy is right for you, or if your vehicles will be protected if you take this step, then you should consult an experienced bankruptcy attorney as soon as possible. If the vehicle is not paid off then it may be possible to keep the vehicle and continue with the scheduled payments. Often a vehicle that is still being paid for has little equity, and in some cases the vehicle exemption may not even be needed. A qualified bankruptcy specialist can look at all of the specific facts in your case and then determine which moves are right in your unique situation. Since each case is different the advice provided may vary depending on the factors in each case.