Car Exemption, can U explain please?

[contemplate]

Hi, I am still unclear about the car exemption. We have one car that we are making payments on, so we would get to keep doing that w/ an exemption right? Now if Hubby buys a used car w/ no payments would he also get the exemption? Does he have to have payments? If he would still get it, do they just assume we will use it for maintenance & household needs? Is there a time frame in which you must have bought the car recently or does everyone who has any car get an exemption for it automatically? (I am confused.)

I am asking because our 2nd car is almost dead and we don't think we could be approved for another car loan (nor can we afford the payment.) We looked into leasing but it sounds like we would lose the car after the lease was up, if we were in a 13.

Obviously, we are still "contemplating" the 13. (have been on & off since Dec.) I will be RIF-ed in May, so if I can not find another job we would be forced to file at that point.

Thanks in advance.

[lrprn]

We have one car that we are making payments on, so we would get to keep doing that w/ an exemption right?

It depends on how much equity you have in the car (equity = what you owe on the loan vs. what the car is currently worth) and how much equity your state's bankrutpcy exemptions allow for autos.

Also keep in mind that if you have more than one car to protect, you have to include both cars when you compare equity against the auto exemption protection amount.

Now if Hubby buys a used car w/ no payments would he also get the exemption?

Again it depends on the new car's equity against what is protected by your state's auto exemption. If he buys a $1000 car for cash that's worth a $1000 and your state protects $2000, then that new car should be protected. However, if he buys a $5,000 car for cash, then that car will not be completely protected.

Does he have to have payments?

Not if the value of the car is less than your state's auto exemption protects.

If he would still get it, do they just assume we will use it for maintenance & household needs?

What you use the car for doesn't matter. It's all about equity vs. the auto exemption amount.

Is there a time frame in which you must have bought the car recently or does everyone who has any car get an exemption for it automatically? (I am confused.)

You can buy the car at any time before filing and get the exemption.

You really need to talk this over with your lawyer (or during your 3-4 free intial consultations) before your husband buys a car, regardless of whether it's with a loan or with cash. It would be terrible to find yourselves in a situation where the new car can't be protected because you didn't understand the exemptions correctly.

If you will tell us your state, we can tell you what the bk auto exemption is for your state.

[contemplate]

Lrprn, thanks for the reply. I am in Indiana. (ssshh ) The 1st lawyer we mentioned, recommended trying to get a loan approved for a more reliable car. I think he said, we could get a $450 payment (per mo.) exemption for up to 2 cars. Yet, he didn't mention buying one outright...

At the time everything he said was brand new and we didn't think of many questions. He was a referral from a co-worker (who filed 7- we would have to do a 13) and we haven't been able to find any other referrals. If things get worse we will just pick some after checking the state bar website, like others here advised.
Thanks again.

[pcn]

The ability to use both the ownership and the expense exemptions if you own your vehicle varies by location as well. In AL we were able to use both exemptions, even though our vehicles are paid in full. That really helped in qualifying for a ch7.