My Lawyer said I can keep my car with 6-8k in equity in CH7?

[technoreid1]

We bought a car back in January (30k) and owe 20k on it now. Kelley Blue Book Private party value is about 28k although in reality the actual car sells for about 25k (from many completed listings I have seen on line)

Our attorney said we can keep the car through a CH7 - just keep making payments and you will keep it....
How is this possible since the equity in the car is about 6-8K?

I am in California.....(Also giving up house in BK)

Any opinions on this???

Could exemptions allow us to keep the car?

Thanks, techno

[325Falcon]

Depends on your exemptions. Chances are that your car does not truly have that much equity in it. I think you should be using the "trade-in" value not the "private sale" value. If the trustee takes the car he will get the auction or the wholesale value not the private sale value.

[HHM]

Did your attorney explain to you the personal property exemptions. I am guessing the attorney's advice is based on (1), the amount of exemption allowed in CA (2), what 325Falcon pointed out, the value of the car for BK purposes is usually trade in value...so, in reality, your car does not have as much equity as you think.

[technoreid1]

So you think the trustee would get the "trade-in" value rather than private sale value? I hope so! Or rather I should go by "trade in" value rather than private party sale value?

I just don't want to lose my car, That's all.... I love our car + my wife does not drive and I have to drive her to work.... and am worried about losing the car because maybe I thought it costs 30k and the trustee would be like "you dont neeed a 30k car"?? And see that there is 3-5K equity in it and force sell it?

If I were to sell the car today I would in reality get between 23-25k.

Also we have a 2nd car that does not run.... worth maybe 500 bucks.... would they take that?


I really appreciate all your input!
Thanks, techno

Depends on your exemptions. Chances are that your car does not truly have that much equity in it. I think you should be using the "trade-in" value not the "private sale" value. If the trustee takes the car he will get the auction or the wholesale value not the private sale value.

[PaKettle]

We bought a car back in January (30k) and owe 20k on it now. Kelley Blue Book Private party value is about 28k although in reality the actual car sells for about 25k (from many completed listings I have seen on line)

Our attorney said we can keep the car through a CH7 - just keep making payments and you will keep it....
How is this possible since the equity in the car is about 6-8K?

I am in California.....(Also giving up house in BK)

Any opinions on this???

Could exemptions allow us to keep the car?

Thanks, techno

Do a google search for California exemptions. I seem to recall the homestead exemption is around $25k and if you don't use it for a homestead, you can use it for ANYthing else. So that may be why you can keep your car. Just guessing.

[SinkingFast]

California has 2 sets of Exemptions. You, as the Debtor/Filer must choose System 1 or System 2. You cannot mix and mingle the Exemptions to suit your needs.

http://www.bankruptcyinformation.com/CA_exemp.htm

You'll note, in System 2, if you aren't claiming the Homestead Exemption, you can apply the unused portion of the Homestead Exemption to any property.

Just guessing here, but since you're surrendering your home in BK and won't be using the Homestead Exemption, your attny could be planning to use System 2.

Definitely a question to ask your attny.