Do I need to exempt a car I already sold?

[sscott4775]

Hello everyone,

I have already completed Schedule C but I'm second-guessing something that I need some help on. This may be a ridiculously stupid question, but I sold a car about 3-4 months ago to an unrelated party...no familial or friend relationship...completely unknown. The selling price and blue book value was far below the state's motor vehicle exemption, but do I still need to exempt this property even though I no longer own it?
I'm asking because since this took place recently I don't want them to try to seize the car or demand paying for it to the trustee because I'm still unemployed.

Thanks for the help!

[free2breathe]

If you sold the car to a virtual stranger for fair market value, I think you'll be fine. If you had sold it to a relative for $1, then you'd have a problem.

Side note: don't think you could exempt the vehicle anyway. The only thing you could do is exempt the cash, if you still had it and had enough exemptions in your state. You sold the car, probably used the money to live on...no worries.

[sscott4775]

If you sold the car to a virtual stranger for fair market value, I think you'll be fine. If you had sold it to a relative for $1, then you'd have a problem.

Hi free2breathe,

Thanks for the input! So basically, as long as it's an arms-length transaction for a reasonable amount (booked at 13-1500; sold for 1,000 due to cosmetic damage and miles), then they don't require exempting sold property? Am I understanding it correctly?

Thanks!

[free2breathe]

Well, my understanding is that the only way you could exempt it is to exempt the CASH you got from the sale. You can't actually exempt something you don't have. If you list a car as an exemption, the trustee would probably require that you bring the title to your 341. Our trustee requested copies of titles to cars we listed. If you still had cash from the sale, and your state allows cash exemptions, you could exempt it that way. Does that make sense? If the trustee were to question you, and you could show that you sold the car for "fair market value" and used the money to live on, I don't think you'd have a problem.

[dumpinmydebt]

Be prepared for the Trustee to ask you if you have sold or transferred property recently. You may want to furnish proof of this sale and proof of where the money went just in case they ask for it.

[sscott4775]

Be prepared for the Trustee to ask you if you have sold or transferred property recently. You may want to furnish proof of this sale and proof of where the money went just in case they ask for it.

I'm prepared to tell the trustee about the sale and the value I received for it. I believe I can provide proof of the sale, but proving how I spent the money will be in issue if it arises and that's what I fear. I received cash for the sale and kept it within the home, and just used it as needed for groceries and bills. I hope I won't get into trouble for not keeping records on the money since I wasn't contemplating bankruptcy at that moment.

Thanks!

[sscott4775]

Well, my understanding is that the only way you could exempt it is to exempt the CASH you got from the sale. You can't actually exempt something you don't have. If you list a car as an exemption, the trustee would probably require that you bring the title to your 341. Our trustee requested copies of titles to cars we listed. If you still had cash from the sale, and your state allows cash exemptions, you could exempt it that way. Does that make sense? If the trustee were to question you, and you could show that you sold the car for "fair market value" and used the money to live on, I don't think you'd have a problem.

That makes sense. I guess since I don't have any money left from it (amazing how fast money goes away, isn't it) then I'm gonna start gathering up the receipt for the sale and hopefully find the bill of sale I drew up for the buyer.
I'm really kicking myself now for my sloppy record keeping of this transaction!

Thanks for the help!

[free2breathe]

$1000 over the course of 3-4 months would be eaten up in food bills alone

[sscott4775]

$1000 over the course of 3-4 months would be eaten up in food bills alone

LOL!! That's very true and that's why even though I can't document where the money went, given this economic climate, plus the outrageous cost of food, PLUS bills...yeah, it would take no time for it to disappear and that's exactly what happened.
So, I'm just gonna gather up proof of the sale and not lose sleep over documenting where it went. If I'm asked, then I'll be honest about where it went and give as much info as requested.

[dumpinmydebt]

I'm sure if you just tell him what you spent it on it won't be an issue.

[sscott4775]

I'm sure if you just tell him what you spent it on it won't be an issue.

I'm sure you're right. I'm feeling quite a bit better about the situation and am sure it will be fine.