Determining What Will Happen To Your Car
Each chapter offers different benefits. Once you understand that you’ll have to pay for any car that you’d like to keep and you know how much equity you can protect, you’ll be ready to decide which bankruptcy option is best for you.
For instance, Chapter 7 bankruptcy is an excellent choice for those who can protect all equity and are current on payments. Chapter 13 bankruptcy works well if you’re behind on payments or you have a significant amount of nonexempt equity and would still like to keep the car.
Bankruptcy Exemptions On Prince Edward Island
- No limit on clothing for you and your family
- No limit on medical or health aids
- Any motor vehicle needed for transportation to work up to $6,500, or up to $3,000 if not used for work
- Household furniture, utensils, equipment, food and fuel up to $5,000
- Tools used by you in your business or trade, up to $2,000
Can I Keep My House And Car In Bankruptcy What Readers Had To Say
One of the first questions people have when theyre thinking about bankruptcy is whether they can keep their house and car. For most people, these are the most valuable things they own, and they dont want to lose them if at all possible. To get a better idea of what happens with homes and vehicles in bankruptcy, we surveyed our readers across the United States about their experiences. Heres what we learned.
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Prince Edward Island Bankruptcy Exemptions
On Prince Edward Island, property exempt from seizure in bankruptcy is set by the provincial government and applies to the equity in an asset. Equity is the difference between the value of the asset and what you owe on the asset.
Example: If you have a car worth $6,000 and you still owe $3,000 on the loan, the equity you have in the car is $3,000. In P.E.I., the exemption for a car is $6,500. In this case, you are entitled to keep the car and the creditors included in your bankruptcy claim cannot take it from you.
An Overview Of How Property Is Treated In Chapter 7 And Chapter 13 Bankruptcy
COVID-19 Update: Bankruptcy courts will hold 341 creditor meetings telephonically or by video appearance until 60 days after the termination of the President’s COVID-19 National Emergency Proclamation. For details, visit the U.S. Trustee’s 341 meeting status webpage or your court’s website. If you’re one of the many struggling with debt due to COVID-19, it’s best to develop a financial plan early. Learn about your options in What to Do If You Can’t Pay Bills Due to the Coronavirus or about bankruptcy for small businesses.
What happens to your property in bankruptcy depends on whether you file under Chapter 7 or Chapter 13. In Chapter 13, you get to keep all of your property. In Chapter 7, you may lose property that isn’t protected by an exemption. But most Chapter 7 filers are pleasantly surprised to learn that they will be able to keep all of their property, either because it’s exempt or because it isn’t worth enough to cover the cost of taking it and selling it.
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Do I Lose All My Assets When I File For Bankruptcy
Contrary to popular belief, when you file for bankruptcy, you will not lose everything. Each province and territory has its own exemptions to the bankruptcy law that outline which of your assets, and how much equity, you are allowed to retain. There are also certain costs and processes that apply across the country. Lets take a look at them below.
Keeping A Vehicle That You Own Outright When You File Bankruptcy
In Ontario, you can keep any motor vehicle worth up to $7,117 when you declare bankruptcy. You can research other provincial exemption amounts across Canada here.
Most older vehicles qualify for this exemption. Your trustee will look up what is known as the black book value of your car or truck to determine whether your vehicle will be considered property in your bankruptcy or will fall under the provincial exemption limit.
If you own a car outright and the fair market value is more than the exemption limit, you can propose to buy out the realizable portion from your trustee over the period of your bankruptcy.
If for example, you have a car worth $8,517, you would have to pay your trustee $1,400. You could do this by making additional payments of $156 during a typical 9-month bankruptcy. If that monthly payment is too much, talk to our trustees about a consumer proposal.
You can keep one motor vehicle under these exemption rules. If you own more than one vehicle and would like to keep both, a consumer proposal may be a better option.
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What Happens To Your Car In Chapter 13 Bankruptcy
Another form of bankruptcy is Chapter 13, which works a bit differently from Chapter 7. Rather than liquidating non-exempt assets to repay creditors, you’ll enter a debt repayment plan. Your property isn’t sold off with this form of bankruptcy instead, your finances are reorganized and you’ll begin the process of repayment. If you own your car outright you’ll be able to keep it.
You will have a repayment period of either three or five years, and once that period ends, some remaining debts can be dischargedmeaning you don’t have to pay them anymore. Not all debts can be discharged, however. Credit card and medical debt can be discharged, for example, but mortgages and student loans cannot.
When you file Chapter 13 bankruptcy, your debt is grouped into three buckets:
- Priority debts: These must be repaid in full. This includes bankruptcy costs, unpaid tax bills from the past three years, and child and spousal support.
- Secured debts: Car loans are included in this category. If you have a car loan, the amount you owe on it may be reduced in the Chapter 13 bankruptcy process if you owe more on it than its current value. Also, if you can qualify for a repayment plan and get caught up on your loan, you may be able to keep the vehicle.
- Unsecured debts: These will be discharged in the bankruptcy after you’ve completed your repayment plan.
What Happens To My Car Once I File For Bankruptcy
You may or may not be able to keep your car when you file for bankruptcy. The type of bankruptcy you choose to pursue, how much equity you have in your vehicle and whether you own the car outright or are financing or leasing it will determine what happens to your car in bankruptcy. Other factors like the value of your car and exemptions in your state will determine what happens to your car once you file for bankruptcy.
The Colorado Vehicle Exemption Can Help You Keep Your Car
In most cases, you will not lose your car during your bankruptcy case as long as your equity in the vehicle is fully exempt. If you have taken out a loan that has been secured by your car , bankruptcy does not make that security interest go away. If you dont make your payments on that loan, the lender may be able to take and sell the car, during or after the bankruptcy case.
If you are not behind on your loan payments, you may be able to keep your car if you agree to keep making payments and sign a reaffirmation agreement if required by the lender. You may even be able to negotiate a lower principal amount, based on what your car is actually worth. If you are behind on your loan payments, you may want to file a Chapter 13 bankruptcy petition. Chapter 13 bankruptcy may allow you to pay what your car is currently worth versus what your loan amount is. Chapter 13 also allows you to catch up on your back payments and bring the loan current.
Bankruptcy Exemptions For Farmers
Up to 160 acres of land is exempt if your principal residence is located on that land and is part of your farm. Any personal property necessary for your farming operations over the next 12 months is also exempt from bankruptcy. For more information about bankruptcy exemptions in Alberta, please speak to a local Licensed Insolvency Trustee.
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Can I Keep My Car After Filing For Bankruptcy
You might think that you have to give up everything that you own to file for bankruptcy. That isnt true. Bankruptcy laws give bankruptcy filers exemptions. The exemptions allow people to keep things that are the most important to them. They allow you to keep the things that you need the most to live, go to work, and carry out your business. Cars are one of the most important exemptions in Nevada bankruptcy law.
When we meet with people who are considering filing for bankruptcy, they often want to know if they can keep their car when they file for bankruptcy in Nevada. In many cases, the answer is yes. However, you will likely want to work with an experienced bankruptcy lawyer in Las Vegas to ensure you are able to do so.
Can I Keep My Car If I File Bankruptcy In Texas
For most people in the State of Texas, a vehicle is necessary to get to work, to school, to the store or to see family and friends. In fact, the widest distance from one point of the Lone Star State to another has been measured at a staggering 800 miles! Around here, you need a car to get around.
For this reason, Texans considering filing for bankruptcy due to hard times have legitimate concerns that the loss of their vehicle might make times even harder. However, claiming bankruptcy and keeping your car is very possible, because Texas has some of the most generous legal protections available.
The trusted Houston Bankruptcy Attorneys at the Law Offices of Kretzer and Volberding P.C. can help you understand how to declare bankruptcy and keep your car, as well as get back on the road to financial recovery.
Bankruptcy Law Revision: The Bapcpa
On October 17, 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act went into effect. This legislation was the biggest reform to the bankruptcy laws since 1978. The legislation was enacted after years of lobbying efforts by banks and lending institutions and was intended to prevent abuses of the bankruptcy laws.
The changes to Chapter 7 were extensive.
Helping You Keep Your Vehicle In Bankruptcy
Having a car is essential for most Americans. When people are thinking aboutbankruptcy, one of their primary concerns is keeping their vehicle.
AtResnik Hayes Moradi LLP , we understand you need transportation to and from work, as well as for running errands and other purposes. Thats why our lawyers are dedicated to helping people filingChapter 7 andChapter 13 bankruptcy find the debt relief they need while retaining their cars.
For more detailed bankruptcy information tailored to your unique situation, call our office at to schedule a free consultation.
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Northwest Territories / Nunavut / Yukon Exempt Property
The above exemptions for the territories do not apply if:
- You are behind on child or spousal support payments.
- You have absconded or are about to abscond from the territories, leaving no spouse or family behind.
A Licensed Insolvency Trustees is your trusted resource for current information on insolvency solutions, and factors that may affect your specific situation. Contact a Licensed Trustee today. Your first appointment is free, and your discussion is confidential.
Find a local trustee that you can rely on. We have trustees everywhere from British Columbia to Ontarioand more.
What If You Owe More Than Fair Market Value Or You Cant Afford The Payments
If you have a significant shortfall on your car, it may be prudent to simply surrender the car to the lender when you go bankrupt so that you are not overpaying for the vehicle. If you think your car loan or lease is too expensive, and you cant afford to keep up with your payments, you have the option of handing back the vehicle to the lender.
In either case, you must return the vehicle to lender before you file. If you do surrender the car to the secured lender, any resulting shortfall after they sell the vehicle is eliminated as part of your bankruptcy.
In rare circumstances, people sometimes offer their vehicle as collateral for a larger consolidation loan. This is slightly more complicated however a trustee can walk you through options that can help you keep the vehicle if that makes sense.
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How Much Do You Owe On Your Car
One of the main qualifiers that decide whether or not you can keep your car is the amount you owe on it. Typically, when courts are deciding what property can be sold to creditors, there is a specific process they follow.
The equity in your car is simply determined by the value of the car less the car loan. If the amount that you owe is not enough to cover the equity value of your car, then creditors have the potential to repossess and sell it. Simply put, the value of the car cannot exceed the amount you owe when you file.
If all of the equity value of your car is protected through the motor vehicle exemptions of Virginia, then you can keep your vehicle. This means that your cars market value is exempt to creditors.
If You Have Nonexempt Property
Even if you have property that isnt protected by an exemption, you may be able to keep it. First of all, you will get to keep it if it isnt the time and money the trustee would spend taking it and selling it. For example, if you own a second car thats worth $5,000, and you still owe $4,500 on it, the Chapter 7 bankruptcy trustee might decide not to take it. Once the trustee pays the costs of repossessing, storing, and selling the car, whats left will probably be only enough to cover your car note. Your other creditors wont get anything out of the deal. Similarly, if you own property that just isnt worth much , the trustee probably wont bother to take it.
If your nonexempt property is worth more, you may be able to negotiate with the trustee to keep it, but youll have to give something up in exchange. If you have exempt property you dont need, you might be able to trade that so you can keep your nonexempt property. For example, if you really want to keep your nonexempt darkroom equipment , you might offer to give the trustee an antique armoire worth about the same amount, even though youd otherwise get to keep it as exempt furniture.
You can also offer to buy back your nonexempt property, if you can come up with enough cash to pay about what your creditors would have received if your property were taken and sold. You could borrow the money, use your income to pay, or sell exempt property.
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Motor Vehicles With Non
The situation is straightforward if the motor vehicle exemption covers all of the equity in your car. You can use it to cover the car and keep the car during the bankruptcy. On the other hand, if you have equity left over after applying the amount of the exemption, this is a non-exempt asset that must be surrendered to the trustee under Chapter 7. They will sell your car, pay off any loan that may be attached to it, and reimburse you for the amount of the exemption. Any remaining proceeds from the sale will be used to pay your non-priority unsecured debts.
In some cases, especially when a debtor has a substantial car loan, the trustee may not find it worthwhile to sell the car. There may be minimal funds left to pay creditors after the sale, once the costs of the sale, the trustees commission, the loan balance, and the motor vehicle exemption have been covered.
Debtors who want to keep a certain vehicle may be able to negotiate with the trustee to buy the vehicle from the bankruptcy estate. They likely would need to pay less than the amount that would be distributed to creditors following a sale, since the trustee would not need to account for the costs of the sale.
Bankruptcy Exemptions In Ontario
- No limit on clothes for you and your family
- Household furniture, utensils, equipment, food and fuel up to $13,150
- Tools and instruments used by you in your business up to $11,300
- One motor vehicle up to $6,600
- If the equity in your home does not exceed $10,000, your home is exempt if the equity exceeds $10,000, then your home is not exempt from seizure
- Most pension plans and certain types of life insurance policies
- RRSPs, except for contributions in the 12 months before the date of bankruptcy
- For farmers, up to $29,100 for livestock, fowl, bees, books, tools and implements of the trade
For more information on bankruptcy exemptions in Ontario, find a Licensed Insolvency Trustee near you.
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