One of the first questions I am usually asked in consultations is “can I keep my car?” This is understandable, because we need our cars! They get us to work, to school, to family…In this country, where we don’t have a comprehensive transit system, cars are everything. So can you keep your car in bankruptcy?
Usually, YES. In Ohio, you can keep up to $4,000 in equity in your car. In other words, if you have a car worth $10,000 and you owe $6,000, you have $4,000 in equity and your car is safe from creditors. If you have a car worth $10,000 and you owe $15,000, you have no equity, and your car is safe. But, if you have a car worth $10,000 and you own it outright, you have $10,000 in equity and the car is at risk of being sold by the bankruptcy trustee. In that case, you would receive $4,000 from the sale, and the remaining $6,000 will be distributed to your creditors. If you just can’t stand to part with your vehicle, and have more than $4,000 in equity, there are still options to have you keep your car. Be sure to ask your attorney what these options might be.
What about your other belongings? Can you keep your house? Your jewelry? Your 401(k)? Most of your belongings are protected through exemptions. Think of exemptions as umbrellas: so long as the amount of the exemption (the size of the umbrella) is bigger than the amount of your property (the size of the things sitting under the umbrella), your property is protected. Different exemptions are applied to your property.–for this reason, you will want an experienced bankruptcy attorney who knows exemptions and can apply them correctly and strategically.