When you have hit rock bottom with your finances and are thinking of filing for bankruptcy, it’s not an easy decision to make. You may be constantly worried about what the future holds.
It’s not uncommon for people to worry about keeping some of their most important possession – like their car. Whether your car is old or new, you may need that for transportation, so your concern is valid.
The value of the car is what matters
The net worth of your car will determine whether you get to keep it or not after filing for Chapter 7 bankruptcy. First, its value will be ascertained by comparing it with the current fair market rates for a similar make. Then, you have to subtract from that value the balance of any loans on the vehicle. After that, you can check whether the figure is below or above the bankruptcy exemptions in your state.
In Florida, you are allowed a vehicle exemption of up to $1,000. It means that if the value of your car falls below this figure, you can keep it. A further provision provides an amount of up to $4,000 if you do not utilize your homestead exemption. Given that most people owe more on their vehicles than they are worth, it’s unlikely you’ll lose the car.
Do not hide or give away the car to get around the rules
You may be mulling over hiding your car or giving it away to avoid the regulations. That is ill-advised as it could amount to fraudulent actions whose consequences may be disastrous. You may find yourself facing hefty fines or even time in jail.
When done right, filing for bankruptcy can give you a new lease of life, free from most debts and with a chance of bouncing back. Therefore, it is essential to be aware of your rights as you plan on taking the leap.