Will The Trustee Take My Car?

A common misconception in bankruptcy is that you must give up everything you own. If you are filing under Chapter 7, the Trustee's narrow focus is the amount of equity you have in your property. Equity is the difference between the amount you owe and the value of the property.

For example, if you owe $15,000 on your 2005 Toyota Corolla and the car is only worth $9,000, you have negative equity. If you owe $15,000 on your 2009 Toyota Corolla and the car is worth $19,000, you have $4,000 of equity.

If you do not have equity in your property, the Chapter 7 Trustee is not going to be interested in your property, for purposes of selling that property for the benefit of your creditors. Why? Because there is no monetary benefit to your creditors by selling the property because there is no equity, or available money.

If you do have equity in your property, ask your attorney if the equity is below Georgia's allowable exemption levels. If you have equity in your property above the exemtion levels, the Chapter 7 Trustee may attempt to sell your property for the benefit of your creditors.

In Georgia, the motorized vehicle exemption level for a single-filer is $3,500. What this means is if the equity in your car is less than $3,500. and your attorney uses Georgia's motorized vehicle exemption, your car is protected from the Chapter 7 Trustee's control, and you can keep your car.

The best case scenario, for purposes of bankruptcy, is that you have negative equity in your car. The standard for valuing your car in the Northern District of Georgia is using Kelly Blue Book, NADA, or some other similar online resource.

We offer free, confidential consultations if you need information about your unique circumstances. (404) 680-7010 Email us with suggestions for our next blog post angel@vanwierenlaw.com