boats and other "luxury" items

[jb4lcm]

OK - my first post here - I did make a search already and didn't find answers to my specific questions about luxury items so take it easy on me.. maybe I didn't FIND the answers that ARE here . . .

I am a small seasonal business owner - sole proprietor - struggling in this horrible economy. Things aren't looking too good and we are now having to seriously consider chap 7 due to 90K in unsecurred C/C debt we have been paying on for 3 years and now don't have the funds to pay. We cannot afford health ins either. I own 2 trucks and a boat - all paid for. Values for these are well over $10K EACH. Must these be sold???

Also - when things were a LOT better, we, like many others, bought things like quads big screen TVs, etc (also paid for). I also have an expensive watch that was a GIFT 18 years ago that is still worth well over a grand. I also have some art work that ran me over $4K - a wedding present to my wife 17 years ago. Are these things gonna have to get sold if we file chap 7???



JB

[HHM]

It all comes down to exemptions. What state are you in and what is your state's exemption scheme.

To my knowledge no state provides an explicit exemption for a boat. Thus, it is either a tool of trade or your state has a wild card exemption. Tool of trade means you use the boat to earn living. Wild card is simply an amount of money or equity you can exempt in anything you want. Aside from California system II, I don't think any state has a $10K+ wild card exemption. Bottom line, in chapter 7, the boat is, most likely, gone.

The other stuff you mentioned will probably be exempt in some way (except the Quads).

[jb4lcm]

ARIZONA.

I am considering borrowing some money from my sister to aid in the near term and she will consider the pink slip as collateral . . is this a smart move?

[justbroke]

I own 2 trucks and a boat - all paid for. Values for these are well over $10K EACH. Must these be sold???

Without knowing in which State you reside, can't tell you. In California you could enjoy as much as a $22K exemption per spouse in a joint bankruptcy filing.

Also - when things were a LOT better, we, like many others, bought things like quads big screen TVs, etc (also paid for). I also have an expensive watch that was a GIFT 18 years ago that is still worth well over a grand. I also have some art work that ran me over $4K - a wedding present to my wife 17 years ago. Are these things gonna have to get sold if we file chap 7???

Again, a value would need to be placed on each item, and then you will apply your State's bankruptcy exemptions.

If you live in Florida, as I do, I feel sorry for you. Our exemptions are pitiful.

Edited to add: Since it's Arizona, you should peek at the Arizona exemptions http://www.thebankruptcysite.org/exe...s/arizona.html

You won't be able to exempt that boat, even if a tool of the trade since there's a $2.5K limit. Also, those quads are probably going to need to be liquidated. For the love of God and all things that are taboo in the Bankruptcy world... do not try to give away or hide your assets. The Trustee will more than likely go to the Registry of Motor vehicles to see that you have a registered boat and other toys that require registration. Also there are other registries for financed items.

[momofthree]

ARIZONA.

I am considering borrowing some money from my sister to aid in the near term and she will consider the pink slip as collateral . . is this a smart move?

If you do this, be absolutely certain that she perfects the lien against the boat so that any payments made to her are considered on a "secured" loan. Even then, since she is a relative, it might draw some extra scrutiny as far as preferential payments. I'd be very very careful in this scenario.

[rexer]

In California are you allowed the $22k wildcard exemption twice if filing joint with spouse? For a total of $44k wildcard?

[justbroke]

In California are you allowed the $22k wildcard exemption twice if filing joint with spouse? For a total of $44k wildcard?

Under System 2, is $21,825 for the unused homestead exemption. Don't quote me, but System 1 doesn't allow doubling of the homestead exemption, but System 2 is moot on the subject. There was some caselaw that suggests that you can't double it, so don't listen to me.

[momofthree]

In California are you allowed the $22k wildcard exemption twice if filing joint with spouse? For a total of $44k wildcard?

We're in CA. NO, you cannot double the wildcard.

[HHM]

ARIZONA.

I am considering borrowing some money from my sister to aid in the near term and she will consider the pink slip as collateral . . is this a smart move?

Potentially a VERY BAD move. Unless she pays you the actual market value, the trustee can undue the transaction and grab the boat.

As previously mentioned, you would need to make absolutely certain that she perfects the title under Arizona law.

And let's face it, even if she does, you still have a problem. You ACTUALLY ARE selling the boat (to an insider) with the express purpose to hinder, delay, and defraud your creditors.