Bankruptcy law eases rules on keeping your car after you file

junk-car-donationA very modest increase in the amount of equity in a car that a debtor can keep after filing a bankruptcy case went into effect in April, 2013.

Previously, a single debtor claiming federal exemptions was allowed $3,450 in equity in a vehicle.

With the cost-of-living increase that took effect on April 1st, that was bumped up to a whopping $3,675.

So after bankruptcy, you can keep a car that looks like the one up above right?

Well, yes you could, but that’s not the end of the story.

Debtors with a better car can look to the “wild card” exemptions to save their ride. This provides almost $13,000 in coverage, which should be good for most bankrupt motorists.

Married debtors with both names appearing on the title can combine the car exemptions and get a break of $7,350.

Debtors who use the vehicle for work can add a “tools-of-trade” exemption. Would that work for just a commuter vehicle? Maybe.

And as a last resort, debtors could switch to the state exemptions, which are more generous as far as cars and trucks go. For example, Massachusetts has a $7,500 exemption for a car for state residents who file for bankruptcy, and double that — $15,000 if the bankrupt driver is a senior citizen.

The bottom line: if you have to file for bankruptcy, don’t worry about keeping your car or truck.


By Doug Beaton

This entry was posted in Bankruptcy News, Exemptions. Bookmark the permalink. Comments are closed, but you can leave a trackback: Trackback URL.
Call now: (978) 975 - 2608