If you are relying on commuting by your truck or car to your office, giving up the car/truck due to bankruptcy. It can be even worse if you own a truck and use it for your side-income or if it is your source of employment directly or indirectly. The good news is that most States in the United States of America allow for a provision that helps protect your truck or a car. There is a specific value threshold though that means, if your car or truck is not a luxury one or is an inexpensive one, you might just be able to keep it under state provisions. To learn more about bankruptcy and seek best advice relating to it log on to Recovery Law Group now.
What does asset exemption mean?
When filing bankruptcy under Chapter 7, which requires you to surrender your assets in order to pay off your dues. However, not all assets have to be surrendered and there are some exemptions. Maintenance of home and employment is an essential aspect of every state guideline. These beneficial laws allow a filer to retain certain assets, which can be listed as follows-
- Furniture in the household, which are not associated as luxury
- Wedding ring
- Inexpensive or not luxury or ordinary vehicle
- Retirement money which has been qualified by ERISA
- A part of your equity in the home, which is filer’s primary residence
What exemption rules can allow me to keep my truck?
There are three common exemptions which can be applied for in order to keep the truck or car during and after bankruptcy. These three exemption rules can be listed as follows-
- Tools of the trade code
Some states in fact majority of them allow the bankruptcy filer to retain some properties that are essential for work. A work truck or a car driven exclusively for work purposes in the past should qualify for this exemption code. You still, however, may need to provide strong evidence that you need the car/truck to generate income or to keep up with employment. The amount of exemption can be capped around $1,500 to $10,000 depending on the state in which the bankruptcy has been applied.
- Motor vehicle exemption code
This exemption code allows bankruptcy filer to retain his/her car or truck. There is no justification or reasoning needed with respect to use/income generation or any such criterions. However, most states have a very slim threshold a will usually allow for a few thousand dollars as exemption amount. In order for the bankruptcy trustee to not exercise your automobile, the exemption amount should cover your vehicle’s present market value. Else, the bankruptcy trustee can exercise right to liquidate the same. The value of the vehicle plays a very significant role for qualifying under the motor vehicle exemption code. It shall vary from state to state.
- Wildcard Exemption
Some states allow you to protect your assets up to a blanket value during bankruptcy. This exemption is usually larger, but it shall incorporate all exempt assets and the non-exempt assets which you had like to keep. If you have lower value or worth of exempt assets, this can be an ideal option to safeguard your car or a truck.
What if you are not able to use any of the three exemption codes?
The alternate option if you do not want to use the above exemption codes would be to pay off the nonexempt value of the car/truck. Under certain circumstances, you can payout the fair market value of the car loan and the remaining debt shall be released, and you shall also be able to keep your car or truck. In most circumstances, bankruptcy trustee shall allow you to pay the equity and retain the car.
If you do want to get into ifs and buts and want to safeguard your car for sure, Chapter 13 bankruptcy Dallas is the best option. Since most of the debt shall be paid off in 3-5 years, the filer retains most of his/her assets, whether exempt or nonexempt. There is more authority with respect to assets when filing under Chapter 13 bankruptcy. Seeking professional assistance can help you drive the situation better, +1 888-297-6203 is your one-stop helpline.