Chap 7 auto with equity

[Lautermilch]

I have Elantra worth about $8500 owe $2500 that I want to reaffirm. The lawyer says that I have to get a loan from the Trustee to keep the equity. Does that mean it becomes a payment to the court or I have to go to a bank?

[despritfreya]

It's not a loan from the Trustee. Florida vehicle exemption is very low. I believe it is only $1,000 ($2,000 for a married couple).

Using your numbers and assuming you are not married, the Trustee will sell the vehicle, pay off the lien, give you $1,000 and use the balance, $5,000, to pay creditors. If you want to keep the vehicle you have to "purchase" the non-exempt equity from the bankruptcy estate. The non exempt equity (using your numbers) is $5,000.

Basically, the Trustee is going to sell the vehicle to the highest bidder. He does not care who that bidder is (you or someone else). As to a loan, you need to finance your purchase from the estate. If you do not have the funds, you will have to borrow from someone or cut a deal with the Trustee to pay him over a short period of time.

Side note: If you end up buying the vehicle from the estate, you will still need to pay the underlying loan ($2,500 plus interest - again, using your numbers).

Des.

[justbroke]

Yeah, Florida still has a messily $1,000 exemption in a single automobile F.S. 222.25(1). That is a big juicy asset for the Trustee to quickly make money for the unsecured creditors. They don't even care if they get the entire $5,000. It's the fact that there is some equity over the exemption and, in your case, that equity is 5X the exemption.

However, if you are not exempting a home and don't need it for other purposes, Florida has an "unused homestead exemption" based on our Constitutional homestead exemption. That provides a "wildcard" of $4,000 (per debtor) if the homestead exemption is not used. I think that's in 222.25(4) (I'm too lazy to look it up).

But remember, Florida has only $1,000 exemption for personal property (under the Florida state constitution). Very little to work with in a Chapter 7.

[despritfreya]

. . . However, if you are not exempting a home and don't need it for other purposes, Florida has an "unused homestead exemption". . . (t)hat provides a "wildcard" of $4,000 (per debtor) if the homestead exemption is not used. . .

Good to know. If OP has a good attny, the attny will know how to maximize this wildcard. Maybe the vehicle can be protected.

Des.

[justbroke]

It's not a lot to work with. In Florida, the exemptions boil down to $1,000 to protect a vehicle and $1,000 to protect all other personal property. The unused homestead exemption adds another $4,000 wildcard but if you're protecting any home equity you will surely not have enough in exemptions to protect all of your personal property.

It's rather odd that Florida lets you keep your unencumbered $8,000,000 home but you lose all but $1,000 of the furnishings. The Bentley must go, but the multi-million dollar house is yours to keep!