Can I keep my car if I file for Bankruptcy?
Bankruptcy Port St. Lucie, Stuart, Jupiter FL
I have had this question come up from clients in Port St. Lucie, Jupiter and Stuart. There is always a tremendous concern regarding whether or not a client can keep their car when they file for bankruptcy, specifically chapter 7 bankruptcy. “How am I going to get to work?” is the biggest concern.
First, it is important to understand that not everyone qualifies to file for a Chapter 7 Bankruptcy. You must be able to pass the means test.
If you are able to pass the means test, then we can determine whether or not you can keep your car. It isn’t a black and white yes or no answer. It depends on your financial circumstances, your available exemptions, and how your vehicle is titled.
If you lease your vehicle, you have no equity in the vehicle and can keep your car, subject to the lease. However, if the lease is putting a strain on your financial position, the car can be surrendered and the lease discharged in the chapter 7 bankruptcy.
If you own your car with no liens and the vehicle is worth $5,000.00 (Kelly Black book Value) for example, then it depends upon what exemptions are available. For example, if the debtor had a homesteaded property they wanted to keep. Then they only would have $1,000.00 in exemptions for personal property and $1000.00 automobile exemption here in Florida. If no other property was protected and the exemptions were both applied to the vehicle, we would still have a $3,000.00 deficiency. This could either be negotiated with the trustee or the trustee could liquidate the vehicle to collect the deficient amount.
If the debtor is financing, the value of the vehicle still comes into play as well as a determination of the equity in the vehicle. If the debtor owes more than the vehicle is worth, then there is no equity for the Trustee to attach. If the vehicle is worth more than the lien, the equity can be either protected with exemptions if they are sufficient, negotiated with the trustee for payment or the vehicle can be liquidated.
If it is a married couple filing, the application of exemptions depends upon title to vehicle, financial circumstances, and priorities of the couple. If a vehicle is titled solely in the other party’s name, exemptions from the other spouse cannot be applied to that vehicle.
It is important to consult with Bankruptcy attorney. Assets, which could have been otherwise protected, may be forfeited due to poor preparation, improper planning, and incorrect application. If you are in financial distress or considering Bankruptcy and live in Port St. Lucie, Stuart, Jupiter or West Palm Beach FL, please give my office a call.
