KEEPING YOUR CAR WHEN FILING FOR BANKRUPTCY IN FLORIDA
Generally speaking, folks can usually keep their vehicles when filing for bankruptcy in Florida.
The primary factor that is examined by the court is how much “equity” you have in your car.
Equity is the amount by which the fair market value of your car exceeds any vehicle loans that are owed.
Example:
Joe’s car has a fair market value of $45k.
Joe also has an outstanding car loan for $43k.
Therefore, Joe has $2k equity in his car.
Once your attorney determines the amount of equity you have in your car, your attorney needs to see if the equity can be covered by the “exemptions” that are afforded to debtors when they file bankruptcy.
The bankruptcy exemptions you can use to cover your vehicle equity are the:
Vehicle exemption ($1k / car for individual filers, $2k/car for joint filers); and
Wildcard exemption ($4k if filing individually and haven’t also used the homestead exemption, $8k if filing jointly)
So if you can cover any vehicle equity with your exemptions, there is no problem with keeping your vehicle when filing for bankruptcy.
Now lets say you have “excess equity” (i.e. equity which cannot be entirely covered by exemptions) in your car.
If this occurs and you are filing a Chapter 7 – we generally approach the Chapter 7 Trustee (who has been assigned to your case) and “strike a deal” wherein the Trustee agrees to not try and sell your car, in exchange for your agreeing to pay the Trustee the amount of excess equity you have in the car over the next 3-12 months.
If this occurs and you are filing a Chapter 13 [which is the repayment type of bankruptcy wherein you keep and repay any secured debts (mortgages, vehicle loans, furniture loans) that you wish to keep, and repay any “unsecured” debts (credit cards, medical bills, personal loans) at a certain percentage – as payment in full!] – your attorney simply needs to ensure that your Chapter 13 plan will pay your unsecured creditors at least the amount of your excess equity over the life of your plan (which usually doesn’t come out to much at all per month when spread out over the entire life of your plan!).
222.25 Other individual property of natural persons exempt from legal process.—The following property is exempt from attachment, garnishment, or other legal process:
(1) A debtor’s interest, not to exceed $1,000 in value, in a single motor vehicle as defined in s.320.01.
(2) A debtor’s interest in any professionally prescribed health aids for the debtor or a dependent of the debtor.
(3) A debtor’s interest in a refund or a credit received or to be received, or the traceable deposits in a financial institution of a debtor’s interest in a refund or credit, pursuant to s. 32 of the Internal Revenue Code of 1986, as amended. This exemption does not apply to a debt owed for child support or spousal support.
(4) A debtor’s interest in personal property, not to exceed $4,000, if the debtor does not claim or receive the benefits of a homestead exemption under s. 4, Art. X of the State Constitution. This exemption does not apply to a debt owed for child support or spousal support.