My Car Is Worth What? Increasing Vehicle Values and the Impact on Chapter 7 Bankruptcy Cases

The increasing costs of used cars have been raising quite a few eyebrows lately. According to a report by USA Today published on February 13, 2022, there has been an average increase of approximately 40.5% in the costs of used vehicles from January 2021 to January 2022. The new car market has also seen an increase of 12.2% for the same period. This increase has made motor vehicles, both new and used, more valuable than they have been in quite some time. This has created some ripples in the bankruptcy world, particularly in Chapter 7s. Chapter 7 bankruptcy trustees and Chapter 7 debtors’ attorneys have been closely paying attention.

Why Are Vehicle Values So Important to Chapter 7 Debtors?

When reviewing whether a Chapter 7 bankruptcy is a good option, the prospective debtor’s attorney must look to see if the debtor has unprotected equity assets.  With vehicles fetching a higher than customary price, it means that there will be more vehicles with more equity than the law protects. Where the motor vehicle has unprotected equity, the Chapter 7 trustee may ask the debtor to surrender the vehicle or repurchase the non-exempt equity.

Note: As a reminder, the motor vehicle exemption in Florida is $1,000.00. The Florida legislature is considering a bill to increase the motor vehicle exemption from $1,000.00 to $5,000.00.

Can I File for Bankruptcy and Keep My Car?

With the increase in the unprotected equity in the motor vehicle, how the owners are listed on the title or registration becomes exceedingly important. Under Fla. Stat. §319.22 (2)(a), motors vehicles registrations bearing the name of two or more persons separated by the word “or” are held to be jointly owned by all individuals on title with each having the right to sell or transfer the motor vehicle as each sees fit. Stated another way, each registered owner is 100% the owner of the vehicle. For bankruptcy, this means that the entirety of the vehicle’s equity will be attributable to the bankruptcy filer. Conversely, under Fla. Stat. §319.22 (2)(b), motor vehicle registration with the names of the co-owners separated by the word “and” indicates that the transfer of the vehicle is dependent on the consent and signature of the other co-owners. This allows the equity to be equally divided between the owners of the vehicles.

Explore Your Options with a Chapter 7 Bankruptcy Attorney

If you are considering filing bankruptcy, choose a law firm that will fight for you to help you in becoming debt-free.  Contact us now for your 100% free consultation with one of our attorneys.  We will go through the details of your specific situation, help craft a plan that works best for you, and put you in the best position to try to obtain relief from these debts.  Call us now at 1-888-FIGHT-13.

Loan Lawyers has helped over 7,000 South Florida homeowners and consumers with their debt problems, we have saved over 3,000 homes from foreclosure, eliminated more than 100 million dollars in mortgage principal and consumer debt, and have recovered over 25 million dollars on behalf of our clients due to bank, loan servicer, and debt collector violations.  Give us a call today.