Will I be able to keep my vehicle in Chapter 7 bankruptcy?

I’m looking to file bankrupcy for $135,000 worth of debt and my only vehicle is worth $10,000. Can it be seized?

Asked on August 13, 2012 under Bankruptcy Law, Michigan

Answers:

S.L,. Member, California Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

There are exemptions you file with your bankruptcy to be able to protect various assets from creditors' claims.  There is an exemption for an automobile.  The amount of the exemption depends on whether you are using the federal exemptions or your state's exemptions.  You have to select either all federal exemptions or all state exemptions.  You can't use both.  Whichever gives you the larger exemption, you should claim.  If the exemption you select for the auto is not large enough for the value of your car, you may be able to use a remaining portion of an unused exemption or the wildcard exemption plus the auto exemption to protect your auto from creditors.


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