Can I keep my cars, and how do they determine value?

[adviceplease]

Hi everyone I am new to the forum and I was wondering if someone could answer some questions for me.

My husband and I are looking into filing for chapter 7 bankruptcy due to job loss and health issues. We own 4 cars (only 2 run fully) and was wondering if we might be able to keep them all? What value do they use to determine what the car is worth?

Here is a break down on the cars with private value:

1. Car is owned but engine is going, may cost more than car is worth to fix. PV: $4155 (if running right).

2. Car is owned but not running at all. PV: $4110 (if running).

3. Car is financed, originally owed $15,000 balance paid down to $4700. PV: $5495

4. Car is financed, originally owed $30,000 balance paid down to $8400 (soon to be main mode of transportation). PV: $13450.


The person I talked to said we may have to let car 4 go back to the finance company and buy a cheapy beater to drive but this car is on warranty and almost paid off compared to the original purchase price. It makes no sense to let it go back and buy a car I most likely will have to pour tons of money into. The cars that are not running are not worth anything at this point until we can fix them.

Car 2 is paid off but hubby's dad is still co-signer on the title so we are not sure how that will work out?

Car 4 is current up to date because they threatened a repo so we paid it instead of other bills and car 3 is 10 days past due.

Any advice? I know we should dump the cars but we are so close to owning them and we need dependable cars to drive.

Also.....do they come look at the cars or do they just go off of kbb?

[backtoschool]

Hi everyone I am new to the forum and I was wondering if someone could answer some questions for me.

My husband and I are looking into filing for chapter 7 bankruptcy due to job loss and health issues. We own 4 cars (only 2 run fully) and was wondering if we might be able to keep them all? What value do they use to determine what the car is worth?

Here is a break down on the cars with private value:

1. Car is owned but engine is going, may cost more than car is worth to fix. PV: $4155 (if running right).

2. Car is owned but not running at all. PV: $4110 (if running).

3. Car is financed, originally owed $15,000 balance paid down to $4700. PV: $5495

4. Car is financed, originally owed $30,000 balance paid down to $8400 (soon to be main mode of transportation). PV: $13450.


The person I talked to said we may have to let car 4 go back to the finance company and buy a cheapy beater to drive but this car is on warranty and almost paid off compared to the original purchase price. It makes no sense to let it go back and buy a car I most likely will have to pour tons of money into. The cars that are not running are not worth anything at this point until we can fix them.

Car 2 is paid off but hubby's dad is still co-signer on the title so we are not sure how that will work out?

Car 4 is current up to date because they threatened a repo so we paid it instead of other bills and car 3 is 10 days past due.

Any advice? I know we should dump the cars but we are so close to owning them and we need dependable cars to drive.

Also.....do they come look at the cars or do they just go off of kbb?

How many cars you get to keep will be a function of what exemptions your state allows, and what else you need the exemptions for.

If there is any equity in the car, it needs to be exempted. If the deed has two owners, then half the equity of that car would need to be exempted.

The value is determined by kelly's blue book or sites like that. (www.kbb.com).

Typically most states have some sort of car exemption but it is only $1,000-3,000 depending on the state. Many states also have wildcard exemptions that can be applied to the car. We would need to know what state you are in, whether you are claiming a homestead exemption, etc to figure out how much equity in your cars you will be able to exempt.

[adviceplease]

Hi, thank you for the reply! The only things we have to exempt is our house, 4 cars, and maybe or furniture and tv’s but they are old.

Here is a break down on the cars with private value:

Car 1 PV: $4155 (if running right).

Car 2 PV: $4110 (if running).

Car 3 PV is worth $800 more than what I owe.

Car 4 PV is worth $5050 more than I owe.

Our house has dropped in value due to many foreclosures in the area and is worth barely what is owed.

I read online that I do not have to include the cars that are financed in the bankruptcy if they are current on the payments before the bankruptcy is finished, do you know if this is true?

Also, do they find the value by using trade in value, retail value, or private sale value?

Thank you!!

[backtoschool]

My lawyer told me that you do have to include the cars that are financed, you just reaffirm them.

What state are you filing in? Some states allow you to use unused homestead exemption amounts towards other things.

My lawyer told me to use the private value on kbb.com

The trustee won't care if the cars aren't running. You need to claim the kbb value anyway, but can include repairs as an expense on your expense schedule.

It's important at this point to know what state you are filing in, as that will determine how much exemption you have left to apply to the cars. Every state's exemptions are different, and some states allow federal exemptions and some do not.

[adviceplease]

Sorry, I am in Michigan.

So should I not bother to tell the lawyer that they are not running, or does this bring down the value they will use on KBB? The one car is nice but it broke down a year ago and we can not fix it right now.

The other one the engine light has been on forever and is acting funny so it probably will need a new engine soon so that leaves the 2 financed cars as transportation.

Do you know if the lawyer will need to see the cars (the one that is not running is stuck in the garage) or do they just go by what you say is the condition and mileage?

[backtoschool]

I am in Michigan too, so actually i can help you

In Michigan you can use the federal exemptions which are better.

You have a $10,125 wildcard exemption out of your $20,200 homestead exemption that can be applied to anything. (assuming you don't have that much equity in your home) What this means is that if you have less than $20,000 of equity in your home at current appraised value, then $10,125 can be applied to other items that you own, like your cars.

You get a $3,225 auto exemption.

You get a $1.075 wildcard.

You get a separate $10,775 for your household goods (up to $525 per item, garage resale value) None of this can be applied to the cars, but you can use the household good exemptions for all of your other property.

So, I think your cars will fit in this scenario, provided you don't have that much equity in your home.

[adviceplease]

I really think that my house is only worth what I owe on it now by looking at the selling prices in the area. It use to be worth $30,000 more than owed the last time we refinanced but all the foreclosed houses brought it down.

Do they go by the value of houses selling in the area to determine what the house is worth?