Schedule C Question

[davedude]

If I'm surrendering my vehicle, do I need to list it under my exemptions (schedule C)?

[BKParalegal]

Nay

[davedude]

Thx...figured I didn't but wanted to double check!

[despritfreya]

If I'm surrendering my vehicle, do I need to list it under my exemptions (schedule C)?

You are in Az. You are entitled to a $5k exemption. Unless you have another vehicle to which you will use the exemption, you should claim it. One should always maximize their exemptions.

What happens if the Trustee determines that your lender has not properly perfected the lien and decides to liquidate the asset? If you fail to claim your exemption you will lose it. This exact scenario has been raised more than once on this forum. If you fail to utilize the exemption and it turns out that the lien is avoidable by the Trustee (as rare as that is) you will be running around like a chicken with its head cut off in an effort to amend Schedule C - especially if you are pro se and fail to recognize the issue.

Exempt the vehicle so you do not have to worry about it.


Des.

[BKParalegal]

Desprit, you are talking a needle in a haystack of needles and even if the trustee found the lien not to be perfected ( which is one of my jobs as a paralegal to a trustee and we only look at cars purchased within a year of filing) all it does is now make the trustee the lienholder, so davedude would have to buy the car from the trustee and he wants to surrender it. Also if he is using fed exemptions then why waste finite exemption dollars on a surrendered asset.

My original answer is your best answer, nay.

Good luck

[justbroke]

I always encourage people to take EVERY exemption, even if there is no equity to protect. You never know what would happen and that needle does show up often, especially where there are issues with the integrity of title. The Trustees are sometimes unpredictable and you may as well use an exemption that won't be needed, than to wish you did later.

I guess this is the finer art of filing. I'd rather exempt it now, than litigate later.

[despritfreya]

Desprit, you are talking a needle in a haystack of needles and even if the trustee found the lien not to be perfected ( which is one of my jobs as a paralegal to a trustee and we only look at cars purchased within a year of filing) My original answer is your best answer, nay.

Sorry, but that is the difference between you and me. You would leave things to chance, I protect my clients to the fullest extent allowed by law.

And, by the way, not such a needle. Has happened at least 2 times on this board since I joined, 1 time on another board I frequent, and, in my 23 years of practice, about a dozen or so times. While that is less than 1x/year, it is more than just a "needle in a haystack".

Des.

[davedude]

So if I'm surrendering the vehicle and the loan value is lets say $20k but the value of the car is $16k why would I exempt it? I want to give it up...

I guess I don't understand.

[justbroke]

So if I'm surrendering the vehicle and the loan value is lets say $20k but the value of the car is $16k why would I exempt it? I want to give it up....

Because if the Trustee finds that the "lien" and hence the title is defective, the Trustee would take the car (from the creditor and you), sell it, and then distribute the proceeds to the all unsecured creditors (pro rata). This means that if you had a $2K exemption, you wouldn't get any of the proceeds. While it doesn't happen "that" often, I'd hate to see you leave money on the table.

It's only an extra precaution. If you don't take the exemption, it won't affect you, but if you do not take it and there is money that the Trustee gets from selling that asset... you just left money on the table.

[HHM]

When available, always claim the exemption.