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Can I exempt my old taxi (from my old business) in my Chapter 7 Bankurptcy with the tools of the trade exemption?

Los Angeles, CA |

I used to be a taxi driver but I recently left the industry and work construction. I originally bought the taxi to use for my taxi cab business. I have another car besides the taxi that I use for my personal use. But now I am no longer in the industry. Can I still use the tools of the trade exemption on my taxi or is that exemption only permitted where a person is currently using the taxi in his business?

Attorney Answers 4


  1. Best answer

    No. Tools of the trade exemption only applies if the tools are actually used to generate income from a trade. If you are no longer earning income from that trade, it's not necessary to your livelihood and thus the exemption doesn't apply.

    You might be able to use the wildcard exemption under CCP 703.140.

    Mark Markus has been practicing exclusively bankruptcy law in California since 1991. He is a Certified Specialist in Bankruptcy Law by the State Bar of California Board of Legal Specialization, AV-Rated by martindale.com, and A+ rated by the Better Business Bureau. His webpage is www.bklaw.com

    Legal disclaimer: Mark J. Markus practices law in California only. The information is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. Answering this question does not in any way constitute legal representation.


  2. I agree with Atty. Markus, if that is no longer your trade, then the Taxi would not be a tool of your current trade. Based on your current trade, you would be able to use the tools of the trade exemption to cover actual tools you may use in construction, such as hand tools, power tools, etc., which would allow you to exempt them under that exemption section and not have to use the wildcard to cover them. Also, if you are thinking of exempting a vehicle as part of a "tools of the trade" exemption, note that one requirement is that the vehicle have a commercial registration. A consultation with a local bankruptcy attorney would help you determine the best way to exempt your various assets. Many will offer a free initial consultation.


  3. Wait. What are you doing with the taxi? You have one driver and 2 cars? You just letting it sit and rust? Is no one else using it as a taxi? Does it still have a meter? Can you drive the taxi on weekends? How long has it been idle? Is your old business a corporation? if a corporation or LLC is it current? Why try and exempt it if its just wasting away? Can you sell it? Can you lease it to someone and generate an income.

    Stuff going to waste is such a waste.....

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    Curt Harrington
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  4. January 2013 brought significant improvement to California bankruptcy exemptions, which are certain to help when it comes to old cabs. CA bankruptcy exemption amounts also increase triennially in April (every three years), with the next bankruptcy exemption bump due April 2013.

    This answer (by San Diego bankruptcy attorney, Asaph Abrams) doesn’t address all facts & implications of the question; it’s general info, not legal advice to be relied upon and exceptions may apply. It creates no attorney-client relationship; it may be pertinent only to CA and/or its Southern District Bankruptcy Court in San Diego. It’s independent of other answers. It may be time sensitive, as in past the “Use by” date: laws and case law change. Hire a bankruptcy lawyer before acting or refraining from bankruptcy or other legal action.