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Could I lose my car is my spouse files bankruptcy?

Jacksonville, FL |
Filed under: Chapter 7 bankruptcy

My spouse and I have been separated for 8 months but our divorce is not yet final. He has filed for Chapter 7 bankruptcy. Both his car and my car are titled in his name, even though I paid for my car. Does this mean I will lose my car in his bankruptcy filing?

Attorney Answers 4

  1. There is no easy way to know. How much is "your" car worth? Is there a lien against it with a lender? How much equity does the car have? And no one knows how much in exemptions your spouse is able to use to protect the value of the car.

  2. Legally speaking, your spouse has "bare legal title" to the car under what's called a "resulting trust". This is because you paid for it and drive it. His bankruptcy attorney should list the car on the Statement of Financial Affairs rather than on Schedule B. You may need to stand up to his bankruptcy trustee, so you should plan ahead now by assembling proof that you paid for and drive this car.

  3. You need to advise your matrimonial attorney, if any, in the divorce action that your spouse has filed Chapter 7 so your lawyer can adequately protect your equitable distribution rights.

  4. Assuming that the car is paid for, there is a very high likelihood that the bankruptcy trustee will choose to administer it, which means auction it for cash with which to pay your soon to be ex's creditors. There are limited exemptions that your ex can use to protect his property in bankruptcy, and it is probably unlikely that he would use any of them to protect the car you are driving. However, there is good news, because you can probably contact his bankruptcy trustee and make an offer to purchase the vehicle from the bankruptcy estate. Some Jacksonville trustees will even agree to monthly payments over 10-12 months.

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