Keeping Your Car During Bankruptcy
One thing many people worry about when considering bankruptcy is that it will mean being forced to turn over their major assets, such as their vehicle. In Florida, the motor vehicle exemption allows you to protect $1000 of the equity of any vehicle per filer ($2000 for couples who file jointly if the vehicle is owned jointly). The vehicle exemption applies to your car, van, truck, semi, RV, or motorcycle, whereas your mountain bike doesn’t (although you could still protect those assets with the personal property exemption).
However, a bankruptcy trustee can demand you turnover your vehicle if you have more than $1000 of equity in it. This depends on how much the vehicle is worth and what you owe on it. For instance, if you have a car worth $4000 and you still owe $3000 on it, the exemption will allow you to at least protect your equity in the car, which means the trustee cannot sell it. However, if the equity in your car is worth much more than the $1000 exemption, it is likely it will be sold to pay back your creditors or, if you wish to keep your vehicle, you will be required to pay the trustee the equity.
Nonetheless, even if your equity in the car is worth more than the exemption, there are a number of other ways you may be able to protect a significantly larger portion of its equity by using other exemptions alongside the motor vehicle exemption.
Additional Bankruptcy Exemptions That Can Help Protect Your Vehicle’s Equity
Florida also has an additional $1000 personal property exemption that can be used to protect any of your expensive personal assets from being taken to repay your debts, including being used to protect the additional equity in your vehicle. So, if the equity in your car is worth more than the motor vehicle exemption covers, using the personal property exemption may still allow you to keep it.
If you don’t own a home or aren’t planning on using Florida’s homestead exemption to protect it (because you are planning on surrendering your home to the mortgage lender), you are then entitled to protect an additional $4000 worth of equity in your vehicle or other personal assets as well. This means that at the end of the day, you may be able to protect a total of $6000 worth of the equity in your vehicle, which could go a long way towards allowing you to keep your means of transportation.
Of course, this also means that your vehicle will likely be one of the only assets you’ll be able to protect, but if you depend on it for your livelihood, it could still be well worth it. Still, it’s always smart to discuss all of your options with an experienced, reputable bankruptcy attorney Palm Beach Garden when considering bankruptcy.
Bankruptcy Attorney Palm Beach Garden
At The Law Office of Kelley, Fulton & Kaplan, we have over 25 years of experience helping people just like you solve their debt problems, so give us a call and we’ll help you decide if bankruptcy is right for you.