My friends tell me you get to keep one vehicle when you file bankruptcy. True or False?
Its not that simple, but most people do get to keep their vehicles. And it’s not a question of whether you need it for work.
The law provides for a $1,000.00 motor vehicle exemption. Husband and wife each get $1,000.00. So if the vehicle is only worth a thousand you’re okay. If you have a loan against the vehicle, we are only concerned about the vehicle value in excess of what’s owed. So if your vehicle is worth less than the amount owed, you keep the vehicle as long as you keep making the loan payment. If your car is worth more than $1,000.00 over the loan amount ($2,000.00 if titled to husband and wife) we may have to set up a payment to the bankruptcy trustee to account for the excess. If the amount owed to the trustee is within reason, we can often set up a payment to the trustee over a number of months.
Your motor vehicle exemption is not your only protection for your vehicle. If you aren’t claiming the homestead exemption or you’re walking away from your homestead property you each get a $5,000.00 personal property exemption, and that can also be applied to a vehicle (after exempting furniture, jewelry, tools, etc.). So its not a simple answer. Free and clear vehicles worth a lot of money can cause a problem, but we can often make that work in a Chapter 13 bankruptcy. More on that later.
Does My Spouse Have To file For Bankruptcy If I File?
If all your debts are owed by you alone and not by your spouse, and your spouse does not have their own problems with out of control debt, there is no reason that both must file. If you are both obligated on a secured debt such as a house, vehicle or furniture payment, it won’t present a problem as long as you intend to keep those things and stay current on the payments. However, if you plan to surrender an item and that thing is worth less than the amount you owe, the non-filing spouse would remain obligated on the deficiency – the amount remaining due after the collateral is sold off.
Some clients tell me they want to file without their spouse and are adamant that their spouse wants nothing to do with the bankruptcy. Although we are not required to list the spouse’s assets or debts, we are required to show their income and certain expenses. Income earned by both husband and wife must be disclosed to determine one’s eligibility to file and sometimes determines whether the case qualifies for a Chapter 7 or a Chapter 13. An exception applies where the parties are separated and not intending to reconcile. In that instance the spouse’s income is not considered. Listing the spouse’s income does not make the spouse “included” in your bankruptcy.
We are here to help you with all your Bankruptcy Attorney needs, whether that solution lies in a straight forward Chapter 7 or in a Chapter 13, should the issues in your case be more complex. We offer a Free Consultation.
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