Question Unused home equity exemption applied to car

[SCorpPain]

I paid ~236,000 for my house, the current appraisal is 220,000, I owe 194,000.

Colorado allows a 60K home equity exemption. My car is paid for, but the values I am seeing on the net -- Edmunds.com being one place -- are coming in about $4,000 over the allowed $5,000 exemption. I seriously do not want to pay for this car again! And do not want to give it up because I know the history and know what condition it is in.

I have seen a few comments here and on a few other sites indicating that unused home equity can be applied to other items, such as cars. I asked my attorney about it and he said, "no". Yet, I saw the quote below on bankruptcy.lawyers.com/Property-Exemptions-in-Bankruptcy.html

Exemptions for Automobiles
The Bankruptcy Code exemption for a car or automobile is $3,225. The equity in your car is based on the car's market value, less any loans against it. If your equity is more than $3,225, it's possible that you could apply exemption amounts from other categories, such as the exemption for tools of the trade. If the trustee sells it, you're entitled to receive the exemption amount. Finally, it's possible to pay the trustee the amount above the exemption and keep the vehicle.

Any thoughts? If you know of any specific cases or where I can look for them that would be wonderful. Thanks!

[DeadManCrawling]

Well, it IS possible.

Also unlikely, I think.

Depends on the trustee ultimately.

Most of the districts I have read about apply exemptions in a very very narrow window, and will not let them shift about in this fashion.

Do you have a wildcard exemption in case this does not work?

[justbroke]

Be careful with the unused homestead exemption. If you are keeping your home, almost all Districts agree that regardless of your equity position, you are indeed using that homestead exemption. I was lucky, in that I got to use mine, but I had a very peculiar case.

Suffice it to say, that if you are keeping your home, you cannot use the "unused" homestead exemption in many States. Think of the word "unused homestead exemption" as "I have no home". (Some States do allow you to actually use the "unused" portion... but most pretty much agree that "unused" means you don't actually have a homestead.)

You should probably listen to your lawyer.

[SCorpPain]

I don't think that Colorado has a wildcard exemption. I have looked for documentation about one, but have not found anything yet.

Thanks for your reply.

Do you have a wildcard exemption in case this does not work?

[SCorpPain]

I see your point. Though I have read of cases in other states where the person was allowed an amount, say $40,000 in home equity, but only had $20,000 in their home, so their attorney was able to apply the other $20,000 to their car.


I think I will get a couple of appraisals on the car. Mechanically it is fine, but cosmetically it is rough due to using it to haul product for my business. My debt is so danged high, (close to 500K due to a failing business) that my hope is they look at that measley 4K and let it go. Maybe... I will get lucky.


Thanks for your reply.

Be careful with the unused homestead exemption. If you are keeping your home, almost all Districts agree that regardless of your equity position, you are indeed using that homestead exemption. I was lucky, in that I got to use mine, but I had a very peculiar case.

Suffice it to say, that if you are keeping your home, you cannot use the "unused" homestead exemption in many States. Think of the word "unused homestead exemption" as "I have no home". (Some States do allow you to actually use the "unused" portion... but most pretty much agree that "unused" means you don't actually have a homestead.)

You should probably listen to your lawyer.

[eddiep]

I got the NOLO book the other day, I looked up the exemptions for Colorado for you, under wildcard it says none. Boy CO is not generous to bk filers, very few exemptions.

[JRScott]

http://www.thebankruptcysite.org/exemptions/colorado.html

I do not believe Colorado allows you to use the extra homestead exemption, some states do but as far as I can tell Colorado does not.

[SCorpPain]

Thanks for checking that for me.

I got the NOLO book the other day, I looked up the exemptions for Colorado for you, under wildcard it says none. Boy CO is not generous to bk filers, very few exemptions.

[SCorpPain]

That's one of the sites I ran across. I agree it does not look like an option, which is why I was hoping there was some case where it had been done, that I could show the attorney.

There is another possibility. I have very little to put in the "Tools of the Trade" category, yet will likely be doing consulting, so will need a reliable car. I don't know if that will fly or not.

Thanks for checking. I need to bookmark that link.

http://www.thebankruptcysite.org/exe.../colorado.html

I do not believe Colorado allows you to use the extra homestead exemption, some states do but as far as I can tell Colorado does not.