In certain cases, persons who file Chapter 7 cases may keep their motor vehicles. An experienced Sacramento metropolitan area/Northern California bankruptcy attorney like Alberto Montefalcon is here to help you if your financial position requires the consideration of bankruptcy as a solution to once and for all solve immediate financial problems.
Federal law permits debtors in bankruptcy cases to exempt property from their bankruptcy estate, which is the pool of property from which unsecured creditors are paid. Debtors may exempt some amount of value in a motor vehicle. In Chapter 7 cases, the bankruptcy trustee assigned to a case is required to liquidate the debtor’s estate so that unsecured creditors receive a pro-rata share of the debtor’s non-exempt property.
There are two cases in which the debtor is most likely to keep a car, motorcycle, or truck. The trustee will possibly abandon the property, or simply abstain, allowing the debtor to keep the vehicle. These two circumstances are:
- if a debtor exempts the entire amount of a motor vehicle, or
- if some portion is nonexempt but minimal.
Thus, a primary factor in the determination of whether a car may survive a Chapter 7 bankruptcy is the amount of equity in a motor vehicle. If the equity in a motor vehicle is less than the amount of California’s automobile exemption, then the Chapter 7 trustee may not sell it. However, if the equity in the motor vehicle is substantially more than the amount of the California automobile exemption, the Chapter 7 trustee is likely to sell the vehicle to repay unsecured creditors. Future blogs will address exemptions, including the automobile exemption, in greater detail.
To learn more about bankruptcy, contact Alberto Montefalcon, an experienced Sacramento metropolitan area/Northern California bankruptcy attorney. Contact his office online or schedule a consultation at any of our three conveniently located offices. Telephone our downtown Sacramento office at (916) 444-0440, our South Sacramento office at (916) 399-9944, or our Concord office at (925) 222-5929.