If I File Bankruptcy, Will I Lose My Paid-For Car (or anything else)?
By Karen Oakes, Southern Oregon Bankruptcy Attorney on Feb 13, 2007 in Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, General Bankruptcy Information, Protecting Assets In Bankruptcy, Surrendering Property
When you file bankruptcy, whether you file under Chapter 7 of the Bankruptcy Code or Chapter 13, you must provide a list of your property to the bankruptcy court. Under the Bankruptcy Code and exemption laws of the states, each person is entitled to keep up to a certain value for each kind of property. Each state’s exemption laws are very very different and the U. S. Bankruptcy Code is different from them all. Suppose you lived in Oregon and you have a car worth about $5000 and there is no lien (secured debt = a loan of any kind secured by the title to the car). Under Oregon law, you are entitled to “exempt” $2100 worth of equity in a car. That means that you have about $2900 in “non-exempt” equity in the car. If you were in Oregon, you would have a choice: (1) either pay the trustee for the non-exempt equity in the car or (2) Give up the car. Not surprisingly, most people are not happy with either of those choices. Under a Chapter 7 case, you would have to pay the trustee quickly (usually a chapter 7 case is open for just a short time). Under a Chapter 13 case, you can pay the trustee over 36 to 60 months. The same rule applies for other property that is either over the exemption amount allowed or just doesn’t fit into any exemption. An attorney can guide you through bankruptcy pre-planning on how to make the most of the exemptions to which you are entitled.
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