A Chapter 7 bankruptcy is also known as a liquidation bankruptcy. People may need to liquidate some of their property before the courts will grant them a discharge of the remaining amount they owe.
The law allows for certain exemptions that protect assets from forced liquidation during a Chapter 7 bankruptcy. There are a variety of different exemptions available in each state, and there are also federal exemptions that people can use in most jurisdictions.
Do any of those exemptions allow people to protect the vehicles that they use daily?
Yes, there are vehicle exemptions available
Massachusetts provides a reasonable exemption for motor vehicles. There is also an exemption available under federal deductions, which filers in Massachusetts are allowed to select instead of state exemptions.
The standard vehicle exemption in Massachusetts allows a file to protect up to $7,500 in vehicle equity. Those who are over 60 or disabled can protect up to $15,000 in vehicle equity. Massachusetts also allows filers to use their “wild card” exemption to increase the amount of vehicle equity they can protect. The wild card exemption offers up to $6,000 in exemptions, allowing most adult filers to protect up to $13,500 in accrued vehicle equity.
Filers who select federal exemptions can protect up to $4,450 in vehicle equity. They can also use their wildcard exemption for another $1,475, and they can even potentially use any unclaimed exemption available for their homestead/primary residence.
Reviewing total vehicle equity and other assets with a skilled legal team can help those pursuing Chapter 7 bankruptcy relief choose the right type of exemptions and utilize them appropriately when they file. With proper assistance, most people pursuing Chapter 7 bankruptcy can completely avoid asset liquidation.