car exemption (schedule c)

[katfzl]

I asked this question before, and put in 0 as the value of claimed exemption and current value of property of my car on the schedule c exemption because we have a loan on it of about $6000 and it is only worth $3600. We are reaffirming the car, as it is still good and has a good interest rate. We would be in big trouble if we couldn't keep this car. Did I list this correctly?

[justbroke]

First, I'm not sure I'd reaffirm it, since it's only worth about 60% of what you owe, but that's a different discussion. In any event, if your State has a "specific" exemption for the car, and you don't need it for something else, ALWAYS use the exemption.

While it doesn't happen often, should the Trustee find out that the title on the car isn't properly done and the lien is defective, you own the car free and clear of liens! That means, you just gave all that equity to the Trustee and your unsecured creditors because you didn't claim "any" of the value of the car as exempt.

It's a rare problem, but why not just be safe.

As to keeping the car... that's going to be interesting. You might be better off redeeming the car, but you'd have to run the numbers. If you redeem the car, your loan would be at $3,600 not $6,000. However, the interest rates on a Redemption Loan can run from 14% to 25%. Do the math.

[katfzl]

For reasons I don't want to get into publicly, I just want to make sure I am exempting the car correctly and don't want to get into discussions on whether or not I should re-affirm, do a redemption, etc. I need to keep the car, and am concerned about listing it correctly on the exemptions. Is zero the correct value or should I declare it's "value" (what it would sell for) or the loan amount exempt? Just in case of defective lien, etc as justbroke mentioned.

[justbroke]

You should exempt the car in case the Trustee finds a defective title. It doesn't "hurt" anything to exempt the car. The only time you wouldn't, is if you needed that exemption for "real" equity, not "potential" equity. Understand?

[despritfreya]

General rule of thumb. . . maximize exemptions by claiming the amount allowed under the law, even if there is no equity in the asset you are exempting.

Des.

[katfzl]

Maximizing exemptions makes sense, and I certainly have room. I feel uncomfortable putting "zero" down, but wasn't sure if I put the "loan amount" down or the car's "value" on the open market. (loan is $6000 and car is worth $3600).

[despritfreya]

Maximizing exemptions makes sense, and I certainly have room. I feel uncomfortable putting "zero" down, but wasn't sure if I put the "loan amount" down or the car's "value" on the open market. (loan is $6000 and car is worth $3600).

I do not have a Schedule C in front of me but I do believe is asks for the value not the loan/lien amount.

[justbroke]

Yes, it's the value that you place on Schedule C.

[katfzl]

It appears Federal exemption is $3225. My car would be "worth" about $3600 if it were sold, however, it has a loan of $6000. My other car is valued at $1000. Married-filing jointly so can double exemptions I assume. (Although both cars are titled to me-loan is joint however). How can I put $3600 as value when it is greater than vehicle exemption? I have unused homestead, should I use that?

[despritfreya]

I am not familiar with Federal exemptions but I can tell you what I do when there is a question. If, by claiming an exemption on an upside down asset, my client is precluded from claim an exemption on an asset that has no lien, I do not claim an exemption on the upside down asset as the Trustee has no interest in it anyway. Example:

1. Can only claim a $3,000.00 vehicle exemption
2. Have 2 vehicles. 1 is upside down (and debtor is going to reaffirm it) and the other has a value of $2,500.00
3. Debtor claims the full $3,000.00 exemption on the vehicle worth $2,500.00 (because debtor cannot split the exemption and can only apply it to 1 vehicle).
4. Debtor does not claim any exemption on the upside down vehicle because the Trustee has no interest in it due to the lack of equity.

In the above, both vehicles are listed on Schedule B but only the exempt vehicle is listed on Schedule C.

I do not know how the "wild card" works since my jurisdiction does not have one.

Hope that helps.

Des.

[katfzl]

It helps. Federal exemptions let you double up if you are filing jointly, and the exemption is 3225 per vehicle. Does it matter that both vehicles are "titled" only to me (one title is held by the Bank of course, and loan is joint debt). Trying to figure out if I have $6450 total vehicle exemptions available or just the $3225. I considered listing $3600 as the current value of property without deducting exemption (far right column on schedule C) and then 0.00 as value of claimed exemption.

[despritfreya]

It helps. Federal exemptions let you double up if you are filing jointly, and the exemption is 3225 per vehicle. Does it matter that both vehicles are "titled" only to me (one title is held by the Bank of course, and loan is joint debt). Trying to figure out if I have $6450 total vehicle exemptions available or just the $3225. I considered listing $3600 as the current value of property without deducting exemption (far right column on schedule C) and then 0.00 as value of claimed exemption.

You are correct. Stacking Federal exemptions is allowed: 11 USC 522(m) states “Subject to the limitation in subsection (b), this section shall apply separately with respect to each debtor in a joint case”.

This tells me that your wife can claim the exemption in the same property as you, thus doubling the exemption, if she has a “property interest” in the asset as well. Your wife’s “property interest” based upon state law. For example, in a community property state, state law holds that each spouse has an interest in the asset acquired during marriage (with a few exceptions) therefore the title to the asset (car title) is irrelevant.

Unless, under state law, your wife has an interest in the auto that has no lien, I believe only you can claim the exemption. The value of the vehicle would be $1,000.00 and the value of the exemption would be $3,225.00. The other vehicle (the upside down one) would not be referenced on Schedule C.

Again, I do not practice in your jurisdiction therefore I could very well be incorrect. Nor do I know how the "homestead/wildcard" effects you, if at all. You really need to talk to a bk attny in your area.

Des.

[katfzl]

Okay, now it turns out I "may" have a much larger problem. I won't know until Monday, but I am worried that the title to the car with the lien wasn't "perfected". The loan is from a bank, and THEY HOLD the title, but I do not believe they are listed as a lien holder on the title. I have loan papers, and pay for the car. I never knew about imperfect title, and just stumbled upon some posts talking about this. I don't think they were listed as lien holders when I registered the car. I don't know if they received title and turned it into DMV or just kept the title at the bank. Now I feel I REALLY need to exempt the vehicle just in case. One vehicle valued at $1000 (no loan) is listed on schedule C. I am now sure I need the vehicle with the loan as exempt because of possible title issue, but it's value is a little greater than the exemption allows. Do I just list it and use the vehicle exemption of 3225 (car is probably 3600)? We have double exemptions, (filing joint). I am asking if a double exemption is still limited to a totality of 3225 per vehicle, or if it is $6450, and if one vehicle is under, and the other over the $3225, am I still okay because the TOTAL vehicle exemption is still less than the $6450? I am unable to afford a bankruptcy attorney, much as I would like one, and have to figure this out myself.

[despritfreya]

Possession of the title should be equal to perfection of the security interest unless State law requires more. Check your State's version of the UCC Article 9. To be perfectly honest, in the over 20 years I have been doing this I have only seen an institutional creditor screw up "perfection" once as it relates to personal property.

If you are overly concerned and you believe your wife can take the exemption on either vehicle even if her name is not on the title then do either

asset: Liened vehicle
value: $3,600
exemption $3,225

asset: Other vehicle
value: $1,000
exemption: $3,225

OR

asset: Liened vehicle
value : $3,600
exemption: $6,450 (doubled)

Again, I do not know how the homestead figures in. But I do think you are worrying over nothing.

Des.

[katfzl]

Cool. I will check into Arkansas state law. I am so glad I found this forum. I would've been in trouble without it.