File an exemption to retain your car in a Chapter 7 bankruptcy

On Behalf of | Apr 12, 2024 | Bankruptcy |

It’s a good thing that there are debt relief options available for Missouri residents who encounter serious financial problems. Some are business owners, while others are simply trying to make ends meet at home. Chapter 7 bankruptcy is a tool that has helped many people overcome dire financial straits.

Many people hesitate to take advantage of Chapter 7 bankruptcy because they worry that they will lose their vehicle. Many people rely on a vehicle as their primary source of transportation. Without one, they may not be able to get to work, go grocery shopping or other places. The good news is that it is often possible to obtain Chapter 7 relief without losing one’s vehicle.

Chapter 7 bankruptcy liquidates assets to satisfy debts

The way Chapter 7 bankruptcy works is that it requires the petitioner to list his or her assets. These assets may then sold through liquidation. The proceeds are used to pay back creditors. Vehicles are usually part of the liquidation process.

However, if the equity a person has in a vehicle is less than the Missouri exemption limit, then an exemption can be requested to retain ownership of this asset. To determine equity, the loan balance is subtracted from the vehicle’s current market value. The amount is then compared to the state’s exemption limit. A bankruptcy attorney can guide those who are concerned about keeping their vehicles when they file for Chapter 7 bankruptcy.

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Andrew Tarry