Keep car in chapter 7?

[river147]

Hi All. Still very new at this. I was wondering. Is it possible to keep my car in chapter 7? My state allows $3000.00 vehicle exemption and my paid off car is worth about $12,000. Can I offer the trustee the difference and keep my car and still file chapter 7? I would have to liquidate my Roth IRA to do it but I rather not file chapter 13 if I can keep from it. Is this possible????

[GettingGoing]

What state are you in? Is there a wildcard exemption you can put towards the car?

[lrprn]

Hi All. Still very new at this. I was wondering. Is it possible to keep my car in chapter 7? My state allows $3000.00 vehicle exemption and my paid off car is worth about $12,000.

Two questions to ask you first - do you have a loan on the car? If yes, how much do you still owe right now? And how did you value the car at 12K?

I'm asking about the loan and how you valued the car because both impact how much your state's $3K exemption actually protects.

[river147]

keep car in 7?

Thank you for replying. I owned my car outright. I have the title to it. I took it to an appraiser my bk attorney recommended and it was appraised at 12K.
I'm in missouri and they allow $3k exemption on the vehicle. My question is would it make sense for me to liquidate my Roth IRA to pay the trustee the difference so that I can keep my car or should I go ahead and surrender my car in chapter 7? Need some advice here.

[lrprn]

I owned my car outright. I have the title to it. I took it to an appraiser my bk attorney recommended and it was appraised at 12K.

Thanks for the quick answers!

Let's discuss the alternatives *and* the long-term consequences of each.

Option 1: Keep the $12K car by paying your trustee $9K from your retirement. The car immediately continues to depreciate. Costs of keeping a $12K car insured are higher. Your retirement fund is completely depleted. You have to pay back $9K before the financial penalties of borrowing from your retirement early kick in.

Option 2: Surrender the car, remove $3K from your retirement (or better yet, save up the $3K after filing if you have other transportation options) and buy another reliable car to get you through the next 2 or so years. This car can be completely protected by your MO auto exemption. Insurance costs on a less expensive car are significantly lower as well. You have to pay back only $3K before your penalities kick in.

Have to say personally I would choose Option 2. I come out $6K ahead on retirement funds, and it's a lot easier to pay back $3K than $9K into my retirement funds quickly. My insurance costs are lower as well.

Bottom line is a car is just transportation, not a definition of who you are as a person (despite the car manufacturer's assertions otherwise ). I'd rather come out $6K ahead myself.

Of course, you'll have to decide which option makes the most sense to you.