Is Your Car Safe When You File for Bankruptcy?

Filing for bankruptcy can be overwhelming, especially when you’re unsure about what will happen to your personal property, like your car. The good news is that both Kansas and Missouri have exemptions that may allow you to keep your vehicle, but the rules differ by state and depend on the type of bankruptcy you file.

Kansas Vehicle Exemptions:

Kansas provides generous exemptions for personal property, including vehicles. Here’s how it works:

• Exemption Limit: You may exempt up to $20,000 of equity in one vehicle that you use regularly for transportation, typically for work.
• Joint Filers: If you and your spouse file jointly, the exemption may be doubled, allowing you to protect up to $40,000 in equity.
• Handicap-Accessible Vehicles: If your vehicle is designed or equipped for handicapped persons, the $20,000 value cap does not apply.
• Additional Vehicles: If you own more than one vehicle, additional vehicles may be considered non-exempt. However, options may exist depending on the type of bankruptcy you file, how the vehicle is titled, and its use.

Missouri Vehicle Exemptions:

Missouri’s personal property exemptions are less generous:

• Exemption Limit: Missouri allows you to protect up to $3,000 of equity in a vehicle.
• Joint Filers: Unlike Kansas, Missouri does not double the exemption for joint filers.

What Happens in Chapter 7 vs. Chapter 13?

• Chapter 7 Bankruptcy: If the equity in your vehicle exceeds the exemption limit, the bankruptcy trustee may sell the vehicle to pay creditors. However, you may be able to negotiate with the trustee to pay the non-exempt portion and keep the car.
• Chapter 13 Bankruptcy: You can typically keep your car as long as you include the value of the non-exempt equity in your repayment plan and stay current on your car loan payments.

What If My Vehicle Is Non-Exempt?

If your vehicle is non-exempt, there are still options:

• Buy Back the Non-Exempt Equity: You may be able to pay the trustee the value of the non-exempt equity to keep your car.
• Reaffirmation Agreement: If you have a car loan, you may sign a reaffirmation agreement to continue making payments and keep the car.
• Negotiate Through Chapter 13: In Chapter 13, your repayment plan can include the value of the non-exempt equity, allowing you to keep the vehicle.

Why You Should Consult an Attorney

Navigating exemptions and bankruptcy laws can be complex. At Walden Legal Solutions, we provide personalized guidance to help you understand your options and protect your assets.

Contact us today for your stress-free consultation.

Please follow and like us: