You may have heard you could lose some assets if you file for bankruptcy. One you might not want to lose is your car.
You probably rely on your vehicle for many things – for work, to drop your kids at school, do the shopping or ferry your elderly mother about. So what is the truth? Will a personal bankruptcy cost you your car?
It probably won’t
Bankruptcy courts and lawmakers realize how essential cars are to many people. They can see that taking someone’s car away could make their financial situation worse rather than better, and the point of bankruptcy is to give someone a chance to work towards a rosier financial future.
You must tell the court you own a car by including it in the list of assets you present to them. You should not try to hide the fact you own one, as a court could consider that fraud. But once you declare it, you have options.
Protecting property
Each state allows those filing for bankruptcy to protect some assets up to a certain value through exemptions. Tennessee bankruptcy laws do not offer a motor vehicle exemption, but you could use the $10,000 wildcard exemption to cover your vehicle.
What if you still owe money on an auto loan?
If you still owe money on your car loan, the lender may consider repossessing the car. But, if you can pay off the outstanding amount or convince them you can get back on track with repayments once the bankruptcy has freed you from other debts, you can avoid this.
If you are considering bankruptcy, it’s best to get legal help to learn how to protect items you need, such as your car.
