Current Price Of Vehicles Complicates Chapter 7

There has been a lot of attention and buzz about the worldwide supply constraints, which have made finding a reasonably priced automobile extremely difficult. Kelley Blue Book stated in January 2022 that the average price of a used automobile in 2021 was over $28,000, up 28 percent from a year ago and up 42 percent from December 2019. Protecting your vehicle from prospective court liquidation was not a difficult task in previous years. The new reality of the vehicle sector, however, poses a fresh hurdle that chapter 7 bankruptcy filers should address before filing.

What Happens If My Vehicle Is At Risk

A court-appointed Chapter 7 Trustee can request the turnover of all nonexempt equity in any property you hold, including your automobiles, with the goal of liquidating them to pay your creditors. However, in this situation, the Trustee would most likely contact you about a “buyback agreement,” in which you pay for the nonexempt portion of your property’s value and the court relinquishes its interest in that property to you in exchange.

For example, if your car is worth $10,000 and the amount of equity that can be protected by an exemption is $3,325, you can save $3,325. The trustee may offer you a choice of either paying the bankruptcy trustee the difference of $6,675 or surrender the vehicle and receive a check for the exempted portion of the equity ($3,325 in this instance) if the trustee finds a buyer.

If you’re in debt and considering bankruptcy, talk to an Houston bankruptcy attorney right away to make sure you’re doing everything you can to keep your car.