Question about vehicle exemption...

[momofmany]

I'm wondering if anyone can offer me assistance. We have to find a new(to us) vehicle because ours will be repoed soon(we are pretty sure). Anyways, we live in Minnesota so we can use Federal or state exemptions. We don't have equity in our house, so I don't think we will need to be using that exemption. My question is, we are allowed a value of up to $3225 for a vehicle...if someone was not using the wildcard exemption or the homestead exemption, for something else, could you use if for a vehicle that valued over the $3,225??

We are looking at some vehicles in the $2,000-2300 range, but some I kelly blue booked and they value more than the $3225 vehicle exemption would allow. I don't want to get a really good deal and then lose it when we file next spring.

Thanks in advance. Sara

[lrprn]

...if someone was not using the wildcard exemption or the homestead exemption, for something else, could you use if for a vehicle that valued over the $3,225??

A few states do allow extra left over from certain exemptions to be used for other items, but MN doesn't appear to be one of them - http://www.bankruptcyinformation.com/MN_exemp.htm . I don't see anything specific listed in MN's household exemption that states if it isn't used for your house, then you can use it for something else. That means in MN you can't use the homestead exemption for anything but a home.

However as luck would have it, in MN you can choose to use the federal exemptions if you wish - http://www.bankruptcyinformation.com/exemp-fed.htm . The federal homestead exemption DOES allow you to use up to $8,725 for any other property if you don't need the entire amount to protect your home.

We are looking at some vehicles in the $2,000-2300 range, but some I kelly blue booked and they value more than the $3225 vehicle exemption would allow. I don't want to get a really good deal and then lose it when we file next spring.

The motor vehicle exemption is compared to the EQUITY you have in your car, not the car's total value.

In other words, let's say you buy a car for $7,000 and the loan is for the whole $7,000. Over several months you make payments so the loan owed is now $6,000 when you file. $7K minus $6K = $1,000 equity. It's the $1K you compare against the motor vehicle exemption. In this case, this car would be well under the $3,225 allowed in MN AND the $2,775 allowed by Federal - it would be protected no matter which set of exemptions you chose to use.

[momofmany]

However as luck would have it, in MN you can choose to use the federal exemptions if you wish - http://www.bankruptcyinformation.com/exemp-fed.htm . The federal homestead exemption DOES allow you to use up to $8,725 for any other property if you don't need the entire amount to protect your home.

And do you know if the $8,725 is doubled for married filing together?

We wouldn't be getting another vehicle loan, we would actually be buying a vehicle with cash. Thanks, Sara

[lrprn]

And do you know if the $8,725 is doubled for married filing together?

Neither MN or the Federal exemptions mention doubling for a married couple filing together. Your lawyer can tell you if doubling is allowed or not.

We wouldn't be getting another vehicle loan, we would actually be buying a vehicle with cash.

In that case, then the value of the paid-in-full car is what would be compared to the motor vehicle exemption.

[momofmany]

Thank you so much for the info!! Sara

[Boscoe]

lrprn -

Section 522 (m) of the Federal BK code (regarding Exemptions) states "Subject to the limitations in subsection (b), this section shall apply separately with respect to each debtor in a joint case." The limitation just says that both debtors in a joint case must pick the same exemptions, i.e. one can't pick Fed and the other State.

So, yes, exemptions are doubled for joint cases. REALLY helped out our case. We were able to keep a good amount of cash in the bank accounts because we had alot of unused homestead exemptions. And of course, live in a state which allows Fed exemptions.

[lrprn]

lrprn -

Section 522 (m) of the Federal BK code (regarding Exemptions) states "Subject to the limitations in subsection (b), this section shall apply separately with respect to each debtor in a joint case." The limitation just says that both debtors in a joint case must pick the same exemptions, i.e. one can't pick Fed and the other State.

So, yes, exemptions are doubled for joint cases. REALLY helped out our case. We were able to keep a good amount of cash in the bank accounts because we had alot of unused homestead exemptions. And of course, live in a state which allows Fed exemptions.

Thanks, Boscoe! Good to know and glad the doubling on the fed exemptions was so helpful for you and your spouse.