Bankruptcy question.?

Question

Can someone please explain to me about the exemption/equity section on whether or not you can keep your home/car? Well, mostly the question is about the car. My home is under an article of agreement.

I should also mention that the company our car is financed through, is the same company one of the credit cards is through (that we're trying to rid ourselves of).

Answer 1

The exemption/equity section sets certain monetary limits for how much of an asset-value you are allowed to retain.

So, by way of example, if the allowance were say $1000 in clothing, you could keep anything that had that much total value. If you owed some money, only the equity (total value minus amount owed) would count towards the allowance limit.

The same applies for the home and car. You get a certain amount of equity that you can keep. That is calculated by taking the market value, and subtracting what you currently owe (of course, you must also agree to keep paying on it). That equity difference counts against your allowance, as defined on the forms.

So, if your car was worth $12K, and you owed $8K still in payments due (that you agreed to continue paying), the equity value of the car is $4K. That $4K must be less than the allowance limit for the car category, for you to be able to keep it.

Answer 2

Your in a tight spot, because you are filing bankruptcy on another debt through the same financial institution they could very well wait until you have filed and discharged your debt and then demand full payment for the vehicle.

Whether this is legal or not I have no idea but I would not put it past them to do so. You're best bet is to ask the attorney who is handling your bankruptcy.

Answer 3

I will add to what coragryph said that the exemptions vary by state. A state can choose to implement its own exemptions offering the debtor a higher exemption, or can defer to the Federal exemption.

Answer 4

yes you can keep your home and car if the payments are up to date. been there done that