Can I Keep My Car If I File For Bankruptcy?

Most debtors are obviously concerned if they are able to keep their vehicle if they file for bankruptcy.  Generally, the answer is yes.  In Kansas each debtor is entitled to protect up to $20,000 in equity in a vehicle.  For example, if your vehicle is currently worth $25,000 and you owe $18,000 on the vehicle, then you would have $7,000 in equity, all of which would be exempt.  The exemption is unlimited if you are handicapped.

In Missouri each debtor is entitled to protect up to $3,000 in equity in a vehicle.  Missouri also has a "wild card" exemption that you could apply toward additional equity in your vehicle.  The Missouri "wild card" exemption is $600 for individuals and $1,250 for a head of household, with an additional $350 per child.  For example, if your vehicle is worth $10,000 and you owe $6,000 on your vehicle then you would have $4,000 in equity in your vehicle. You could then use the $3,000 vehicle exemption and the $1,250 head of household exemption if you are the head of your household, and all of the equity in your vehicle would be exempt.

Equity is calculated by subtracting the amount of any car loan from the appraised value of the vehicle.  However, if you are making car payments, you must continue to make your car payments after filing bankruptcy in order to keep the vehicle.  If the equity in your vehicle is significantly more than the exemption amount then the trustee is likely to sell it to repay your unsecured creditors.  For more information about bankruptcy please visit my website at http://www.thesmalleylawfirm.com or contact me, a Kansas City bankruptcy attorney at (913) 601-3549 for a free initial bankruptcy consultation.