Lawyer says my car is worth too much to keep

[Ready1]

I am in the beginning process of my chapter 7, and the major sticking point is my car which is in great shape and paid off, worth about 8 thousand. My lawyer says i need to do something with it, either sell it and use the cash, or trade it in and finance something more expensive since i may not get the chance to do so at a decent rate after i file. I am confused at why, if i trade it in for something more expensive, I would be able to keep the new one. I also hate to have a car payment, since the point of the BK is to knock out my bills. I also hate to sell it, buy something less expensive, then just waste the money. I would appreciate any input. Thank you.

[justplaintired]

Just curious what kind of car is it? What state are you in?

[FreshLikeADaisy]

Ready1, this really depends a great deal on what state's exemptions you are using for your Ch7, because the amount of stuff you can keep ("exempt") from your bk varies significantly from state to state. It may be that your equity in this car is more than your state allows for motor vehicle exemptions, but that's not the end of the story at all. Often, there are wildcard exemptions that can be used to cover the remaining equity, or you could even work it out with the trustee to "buy back" the uncovered portion of the equity.

The reason he said to finance a new (more expensive) car is because the lack of equity in such a deal would probably allow you to keep it through the bk. I agree with you; I don't think it's such a hot idea, but I'm sure he's very used to people coming in and demanding to know how this asset or that could be saved from the bk chopping block and that's probably why he suggested it. Look into this a little deeper, because there really are other options. Good luck!!!