I am going to meet with an attorney soon to discuss bankruptcy. I am over my head in debt and need help. I was wondering if I will lose my car if I declare bankruptcy? I own it (paid that off last year) and the value is over $5000.
You may want to have it appraised at the auction house the bankruptcy trustees use, prior to filing bankruptcy, to find out what value they would appraise it for. That value is ultimately more important than any Blue Book value in a bankruptcy in Utah. It's generally that appraised value minus the $3000.00 exemption that the trustee can make you pay in. Best to know before you file about any risks like this, so in your situation where you believe it is worth $5000.00, it's worth it for you to pay $35.00 to the bankruptcy appraiser and find out. If it only appraises for $3000.00 or less, you are in the clear if that's your only vehicle.
These answers are for educational purposes and should not be relied upon as a substitute for legal advice you may receive from your attorney. These answers do not constitute or initiate a client/attorney relationship.
this is what NOLO has to say:
he Amount of Utah's Motor Vehicle Exemption
In Utah, you can exempt up to $5,000 in equity in your car or other vehicle.
Example. Jon owns a 2005 Honda Civic. He owes the dealership $1,000 for the car, and the car is worth $3,000. In Utah, Jon would be able to protect his car in a Chapter 7 bankruptcy because the $5,000 motor vehicle exemption is enough to cover the $2,000 of equity in Jon’s car.
The Federal Motor Vehicle Exemption
Some states allow bankruptcy filers to use the Federal Bankruptcy Exemptions instead of state exemptions, but Utah is not one of these states.
The atty will assist you . 1 question is whart would a trustee NET if the car was sold?
He would have to give u the first 5 K. there may (or may not be additional exemptions that you can stack. That is why you need and have scheduled to see a UT bkcy atty.
Although this is a common worry of most bankruptcy clients, it seldom makes sense for a bankruptcy trustee to take your vehicle, sell it at auction, and pay you the amount allowed as your exemption, and still have money left over to distribute to your creditors. Plus most trustees are not monsters & hate taking away your wheels. Instead, you can often make arrangements to pay the difference between the exempt amount & the value in payments for 6 months to one year. Hope this perspective helps!
The best thing you can do is discuss this with your bankruptcy attorney. There are several options to avoid "losing" your car. FIrst, you could file a chapter 13 bankruptcy if an appraisal proves that there is equity above and beyond the exemption amount. Second, you could pay the trustee the amount of the equity in the car, essentially, entering into a payment plan, if this is something the trustee is amenable to. I practice Bankruptcy in the Southern District of Florida, and the Chapter 7 Trustees are very aggressive here. So, oftentimes, debtors will have to enter into a payment plan to pay whatever personal property etc they have that isn't protected.
Please note that answers to questions on Avvo are for general purposes only, do not constitute legal advice, and do not establish an attorney-client relationship between myself and the questioner.
I agree with Laura's answer. Get your vehicle appraised at Erkelens & Olsen in SLC. It may show a lower value. Some people file Chapter 13 bankruptcies if they worry that the vehicle equity exceeds the vehicle exemption. But the attorney should be able to explain how that works.
The items I discussed above are for information and not to be relied upon. You should talk with an attorney.
Utah has an exemption of $3,000.00 for any one vehicle. If you are the sole owner, you are allowed a $3,000 value. If you are a joint owner with another party, You can apply the other person's exemption as well, providing you with an exemption of up to $6,000.00. The trustee sells vehicles through the auction, but typically, the valuations are based on a "trade-in" value. Reviewing Kelly Blue Book and the NADA values for trade-in values will come close to what the auction house will value the vehicle. If you are over the exemption amount, you can typically purchase the equity from the trustee and keep your car.
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