Bankruptcy and cars
1 – The car is owned and there is no secured loan against the title of the vehicle.
The value of the car can not exceed $9,100.00 There can be more than one vehicle as long as the total is less than this threshold and the vehicles are used for transport.
The value is not car yard (retail value), but wholesale value. What this means is that most people who have a $12,000.00 car will find that for bankruptcy purposes the car is under the limit and they will be able to keep it.
If the car is still valued at more than the threshold and the trustee wants to sell it the trustee has to give the bankrupt $9,100.00 so they can buy a car.
2 – If the car is owned with a partner or somebody else the threshold doubles to $18,200.00. This is whether or not both are going to declare bankruptcy.
3 – The car is used as security for a loan.
If the car is leased or is collateral for a loan the value of the car now does not matter as long as payments can be afforded (and the want to keep the car). The loan repayments continue. The caveat is that the equity in the car is not more than $9,100.00.
The one thing that is important is that the car doesn’t becomes an asset if the loan is finalised prior to the completion of the bankruptcy term.
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