Question about assets/exemptions.

[GettingGoing]

I am asking this question for a family member that recently went and spoke with an attorney.

Married couple and the husband just lost his job of 30+ years. My question is about their assets.

Short story is they have 2 cars. Car 1 has no lien and is worth about 2500. Car 2 is worth 10k and has no lien. That is basically 12.5k in automobile equity. Virginia allows 6k each for husband in wife in automobile equity.

The problem is both vehicles are in the husband's name. Does this mean that the wife's 6k is not used here since both vehicles are not in her name?

[justbroke]

I would hope that the attorney was asked this question and answered it consistent with the law, practices, and relevant caselaw for Virginia.

The problem is just as you elude. The issue is whether there is some joint ownership of the vehicles which would allow the codebtor spouse to claim an exemption . The problem is that you can't use an exemption on something to which you have no property ownership rights. So with the title issue, this could be a problem.

You could possibly use the unused homestead exemption, but it still has the same property ownership issues.

This really is a question for a Virginia bankruptcy attorney.

(Edited to Add: I found a Virginia case that is on point. The case from the Western District of Virginia is on point. You can't exempt property to which you have no title (or are not on the title). (It also references an appellate case.) The issue in the case (In re WILLIAM E. LANGFORD and KATHY M. LANGFORD, Case No. 06-61105-LYN, Western District of Virginia) is pretty much what you have listed.)

[btbeme]

Sometimes, a lien can work in your favor. It needs to be a perfected lien, for certain. And any monetary gain from said transaction would have to conform to the rules of BK law for federal and state allowable expenditures and exemptions.

More detailed thoughts about this type of BK planning can be found within these forums...