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A car is more of an essence that supports travel for work reasons or emergencies. It surely isn’t a luxury for a person applying for bankruptcy. The car might also have some emotional or sentimental aspects attached to it for the owner. It might be as if it was a car that was gifted, or it might be your first car, those are certainly more valuable than the dollar value associated with it.
Ownership status
To understand whether your car can be safeguarded during bankruptcy or not, it is important to know the ownership status of the car. If the car you use is on a lease, it is most likely not going to impact bankruptcy. You can continue to pay the lease amount and use the car for the specified number of miles or tenure. If you own the car with a clear title that means you do not owe any debts for the car and none of the lenders possess any liens on the car, the chances of safeguarding your car can be higher. The type of car whether ordinary or luxury, the current market price, and the purpose of the car can be some factors of consideration while safeguarding your car.
If the car is associated with secured debt, then the filer either can be granted a discharge or a new payment plan must be proposed by the applier assuring regular repayment of the debt. There is no concept of a free car under bankruptcy. Either the debt must be paid, or the car must be given up.
Exemptions to safeguard your car
There are some exemptions of the specified dollar amount that helps in exempting your car from liquidating during bankruptcy proceedings. The exemptions are nominal and are aimed at protecting the poor from basic needs. Hence, if you have an expensive car, or if the car’s market value is as high as it is vintage, you might not be able to protect the car with the exemption code. The exemption is $4,450 per person. Married filers can protect two cars for $4,450 each. This figure is subject to review every few years based on a change in the valuation of cars.
There is a special wildcard exemption that can help cover up a slight bump on the available exemption. So, if your car is valued slightly over the exemption, don’t be disappointed, make sure to log on to https://recoverylawgroup.com/bankruptcy/ to understand some wildcard exemption options to still safeguard your car.
What happens if the car is valued more than the exemption amount?
If a bankruptcy filer is happy to buy a second-hand car for the exemption amount, a higher market value of the car than the exemption should not be an issue. In such instances, the bankruptcy trustee grants an exemption amount to the filer and uses the additional money recouped for settling other debts. If safeguarding your car is the priority, it is important to make sure your car is below the exemption amount and you are set with Chapter 7, releasing most of the unsecured debt, and safeguarding your car as well. If this is not a viable option, then filing bankruptcy under Chapter 13 seems to be the only other option.
In Los Angeles, and Dallas, TX, this choice can be tricky. Do not hesitate to ring 888-297-6203 to clarify your concerns with the professionals.