Does it look like you need to use bankruptcy to get out of your financial situation, but you are worried about what happens with your vehicle? This may be even more concerning if your vehicle is completely paid off. That's why you want to know what happens in this bankruptcy situation.
Know The Value Of Your Vehicle
The first thing that you want to do is figure out how much your vehicle is actually worth. This is not the value of your vehicle when you purchased it, but the value of what the vehicle is worth now after putting many miles and years of wear and tear on it. You may want to use professional sources to get an estimation of the vehicle's value so you can see how it impacts your bankruptcy.
Know The Equity You Own Of Your Vehicle
You'll next need to figure out how much equity you have in your vehicle. If the vehicle is completely paid off and the value is estimated to be $5,000, then you know that your equity is $5,000. It gets confusing when you have a loan on your vehicle that still needs to be paid off.
An easy way to calculate equity is to subtract the loan amount that you still need to pay off from the estimated value of the vehicle. If the vehicle is estimated to be $5,000, but you have $1,000 worth of the loan left to pay off, then your equity is $4,000.
Know The State Exemptions
It's important that you understand what the local bankruptcy laws are where you live since states have different personal property exemptions. You may discover that your vehicle is either far above or below the personal property exemption limit. If your equity in the vehicle is below the exemption limit, then you do not have to worry about anything happening to your vehicle. The vehicle is yours and it cannot be taken away from you. There are problems that can come up when your vehicle's equity is worth more than the exemption value.
If your state has an exemption value of $3,000 for a vehicle and you have $4,000 in equity, you may be required to liquidate the vehicle, pay off the remainder of the loan, and put the additional $1,000 towards paying off debts. You would then have $3,000 left over due to state exemptions to purchase a newer vehicle that is cheaper.
To learn more about bankruptcy and what to do, contact a bankruptcy lawyer in your area.
I am a real estate attorney, and I have been helping clients buy and sell property for many years. Some clients do not realize their legal obligations and options when it comes to purchasing or selling a house or land. I hope that this blog will be a way for people to get information about legal issues in real estate and what they need to know when doing business. Buying and selling property can be complicated, and all parties involved have legal obligations. Know what is expected of you, and you will be able to get the best out of your real estate transactions.