Getting Ready to File 7 but i have equity in my car

[DJMarc]

Getting Ready to File 7 but i have equity in my car around $7,000.00 i live in florida what can i do what should i expect

Thanks

[LadyInTheRed]

You may have to purchase the non-exempt equity from the trustee. Talk to a local attorney about how that would work.

[justbroke]

Yes, Florida is tough with only a $1,000 motor vehicle exemption and a $4,000 "unused homestead" exemption. If you don't claim a homestead and you don't need that $4,000 for other things, you can certainly apply it for the car.

By the way, how did you come up with the value of your vehicle? You could be "off". I think most of Florida uses retail clean Black Book for valuations in Chapter 7s. (You'd have to speak with a local attorney to find out exactly what your District in Florida is using for values.)

[bcohen]

Only $1000 for a vehicle exemption, and that is based on a retail price estimate?! I can't think of too many vehicles which would fit under that paltry exemption, unless they are non-running and need major repairs. Even an old, beat-up Plymouth Sundance or Chevy Cavalier, which might have a private-party Blue-Book value of $800 or so, would likely have a retail price of well over $1000.

[justbroke]

Welcome to Florida, bcohen, welcome to Florida! And to think that for about 4 years, there was serious litigation over just what the $4,000 statutory "unused" homestead exemption entailed. Many Florida Trustees fought, and won arguments which didn't allow you to take the $4,000 "unused" homestead exemption if you kept or stayed in your home! The Florida Supreme Court didn't fix this absurd result, Trustees denying the $4,000 exemption, until 2011.

So just imagine living in Florida with it's $1,000 household goods exemption and $1,000 motor vehicle exemption. (Unless you were lucky and also can claim the $4,000 unused homestead exemption.)

This is why Florida Chapter 7 Trustees sent appraisers to everyone's homes from 2006-2011!

[LadyInTheRed]

Justbroke, is that middle district trustee still sending appraisers to homes? Or has that stopped too?

[justbroke]

Justbroke, is that middle district trustee still sending appraisers to homes? Or has that stopped too?

I believe most of them have stopped unless it's obvious the debtor has miscalculated. This all had to do with the $1,000 household property exemption and whether you could claim the $4,000 unused homestead exemption. When I had him, he did not send an appraiser. I did claim and use the unused homestead exemption.

[LadyInTheRed]

That's a big improvement.

But, you would think that a state who allows an unlimited homestead exemption could allow a larger wildcard for people who don't own their homes. It seems unfair.

We are lucky in California to have a very large wildcard exemption of over $26K if you don't use the homestead exemption, plus another $1350 whether you use the homestead exemption or not. That's assuming you use System 2. System 1 doesn't have the wildcard, but has a bigger homestead exemption, an unlimited exemption for "household items and personal effects" and a jewelry, heirlooms and artwork exemption of $7625, among other exemptions. I suspect that most California bankruptcies are no-asset cases.

[DJMarc]

Hi
Just did my taxes and i have a $8,200.00 payment due , i dont have the money but i could sale the car for book value and pay of my taxes in full ,can i do this before filing for chapter 7 ?

[DJMarc]

Can i sale my car to pay off tax bill?

Im thinking of doing a chapter 7 soon but i did my 2014 taxes and i have a payment due to the IRS of $8,200.00 i dont have the money but i have equity in my car
i can sale for Kelly Blue Book value of $13,000.00 pay off is $5,520.00 so it leaves me with $7,480.00 can i send this full amount to the IRS and finance the rest saving all the papers and cancel checks will their be a problem to file for BK 7

[justbroke]

Since your taxes are recent (2014) they would be considered "priority" unsecured debt and would receive any distribution "first" in a Chapter 7. So paying the IRS should not be treated as a preferential payment. Of course, you're going to ask this during your consults, right? If you don't want the hassle of trying to sell it yourself and dealing with the title issue (with the lien), then you could file Chapter 7 and let the Trustee deal with it. Understand that the Trustee will likely get less money for this vehicle, since it will likely go to auction, and the Trustee will receive a commission which will lower what's available to the IRS. The IRS would be paid before any other creditor.

My concerns are thus. First, how did you reach the KBB value of $13,000? Is that the private party? Is that the dealer trade in? Just which value is that. I'm concerned that if it's private party, you may have issues with the title and no one would probably want to deal with you with an encumbered title. Second, if you choose to just file and have the Trustee liquidate the vehicle, there will certainly be less available than if you sold it to a dealer or private party (notwithstanding the private party issues). It's a tough choice.

I really have no suggestion for you.