While it is true that the exemptions allowed in Florida only allow you to keep $1,000.00 of equity in a motor vehicle, most people who file bankruptcy in Jacksonville, Florida get to keep their vehicles. This is because financed or leased vehicles can just about always be kept by simply continuing to make your normal monthly payments as if the bankruptcy was never filed. This is of course as long as the vehicle is a reasonable necessity for your, or your dependents’, care and support.
What if my vehicle has equity?
A different set of rules applies however when your vehicle has equity that is above the $1,000.00 exemption that is allowed in Florida. For example, when you owe your vehicle free and clear. In such a situation, you might be able to use a wild card exemption to protect the rest of the equity. However, if you are unable to exempt all of the equity, then you may be forced to surrender the vehicle or pay your Trustee the un-exempt equity amount in order to keep the vehicle. Most of the time, your Trustee will allow you to make monthly payments for the equity.
There are two tests that the Trustee will do in deciding if you should keep your vehicle. The first is to determine whether it is feasible. Meaning, if the monthly payments are reasonable and affordable for you. The second and more significant test when keeping the vehicle is whether it is in the “best interest of your creditors.” United States Bankruptcy Code 11 U.S.C. § 1129(a)(7)(A)(ii) states that in a Chapter 13 Bankruptcy, your creditors must receive, at the very least, the amount they would have received had you filed a Chapter 7 Bankruptcy. As an illustration, if you own a motorcycle and wish to keep it in your Chapter 13 Bankruptcy, then if that motorcycle would have been liquidated in a Chapter 7 Bankruptcy, then you will either have to surrender the motorcycle or pay the value of it through your Chapter 13 Plan. Continue reading →