One type of personal property that people are most frequently concerned about losing if they file for Chapter 7 or Chapter 13 bankruptcy is their automobile. Many individuals who file for bankruptcy are able to keep their motor vehicles, but maintaining possession depends on multiple factors.
The amount of equity (the difference between the value of the vehicle and the amount still owed) a person has in his or her vehicle and whether the debtor is still making payments on the automobile are two major considerations. Many people in Ohio and Kentucky rely on their cars and trucks to get them to and from work, so it is critical for them to find some way to retain ownership of their vehicles.
Bankruptcy Lawyer in Cincinnati Discusses Vehicles
If you are concerned about losing your car when you file for Chapter 7 or Chapter 13 bankruptcy in Ohio or Kentucky, it is in your best interest to retain legal counsel. Steiden Law Offices represents clients in Boone County and Kenton County in Kentucky as well as communities all over Hamilton County in Ohio.
Our Cincinnati bankruptcy attorneys understand how to protect the assets most valuable to you and can help determine your most advantageous path forward. Call to have our lawyers provide a complete evaluation of your case during a free initial consultation.
Northern Kentucky Vehicles in Bankruptcy Information Center
- How are vehicles handled in Chapter 7 and Chapter 13 cases?
- What amounts can be exempted in Kentucky and Ohio?
- Where can I learn more about vehicles in Cincinnati bankruptcy cases?
The bankruptcy chapter that a person is filing under can impact what happens with his or her motor vehicle. In a Chapter 7 bankruptcy, an individual who is not making payments on his or her automobile will be allowed to keep it so long as its value does not exceed the exemption limits.
If the debtor is still making payments on the vehicle, he or she has the option of surrendering the automobile and having his or her remaining payments wiped out. If the debtor wants to continue making payments, it may be possible for him or her to either negotiate a reaffirmation agreement. A reaffirmation agreement is repayment agreement that may be the same or better than the prior agreement, but must be approved by the lender and the court. The debtor may also attempt to keep the vehicle through redemption, which iswhen a debtor agrees to pay the trustee an amount based on its current value, not necessarily what is still owed.
In a Chapter 13 case, most people are able to keep their vehicles because even if they are still making payments, those payments are worked into their repayment plans. Such repayment plans can be particularly beneficial for people who have fallen behind on car payments, as lenders will be unable to repossess vehicles so long as the debtors stay current on their payments.
Some Chapter 13 bankruptcy cases also involve cramdowns (involuntary court impositions that allow debtors to reduce the amount owed to the fair market value of the collateral securing the debt over the objections of any creditor). Under the 910 day rule, people who bought their vehicles more than 910 days before filing for bankruptcy only repay amounts equal to the present values of their vehicles. If an automobile was purchased within 910 days of the bankruptcy filing, the debtor would have to repay the entire loan, but the interest rate may be significantly reduced.
Motor vehicle exemptions can be very important in bankruptcy cases. In Ohio, debtors are required to use the state motor vehicle exemption, established under Ohio Revised Code § 2329.66 and revised every three years based on the consumer price index.
As of March 14, 2016, the Ohio Judicial Conference has calculated a revised exemption amount of $3,775 for a motor vehicle in cases filed between April 1, 2016, and March 31, 2019. Ohio Revised Code § 2329.66(A)(2) also allows debtors to use a "wildcard exemption" of $1,250 to protect additional equity in any vehicle.
In Kentucky, debtors are allowed to use state or federal exemptions. State law currently allows debtors to exempt up to $2,500 of equity in their vehicles, but federal law allows debtors to exempt up to $3,775 of equity in their vehicles. It is important to understand that Kentucky does not allow debtors to mix and match exemptions, so you will want to make sure to work with an experienced Cincinnati bankruptcy attorney to ensure that you are receiving as many benefits as possible.
Ohio Revised Code § 2329.66 | Exempted interests and rights — View the state law governing exemptions from execution, garnishment, attachment, or sale. The Ohio Judicial Conference calculates adjusted amounts based on the consumer price index every three years. In addition to motor vehicle exemptions, you can find exemptions for cash, jewelry, and implements, professional books, or tools of a person's profession, trade, or business.
Kentucky Revised Statutes | Chapter 427 — Under this chapter of the Kentucky Revised Statutes, you can view the different sections addressing various exemptions. Motor vehicle exemptions can be found in Kentucky Revised Statute § 427.010(1). Other exemptions included here cover such personal property as burial plots, health aids, and personal injury and wrongful death payments.
Steiden Law Offices | Cincinnati Bankruptcy Attorney
Do you want to file Chapter 7 or Chapter 13 bankruptcy but have concerns about keeping your motor vehicle? Steiden Law Offices can help you determine the best way to maintain possession of your car and still get the fresh start that you need.
Our Cincinnati bankruptcy lawyers have offices in Cincinnati, Maineville, and West Chester in Ohio as well as Kentucky locations in Covington and Florence. You can have our attorneys review your case and answer all of your legal questions when you call or submit an online contact form to receive a free, confidential consultation