Posted On: March 18, 2010
Ohio Bankruptcy Exemptions: Will I Lose My Car if I File Chapter 7 Bankruptcy?
Many bankruptcy clients are concerned that they will lose their car if they file for Chapter 7 Bankruptcy Protection. However, since transportation is usually necessary to maintain employment, fulfill family obligations and for countless other reasons, Ohio provides a specific exemption for automobiles in bankruptcy proceedings. The Ohio bankruptcy exemption for automobiles currently allows a person filing for bankruptcy protection to exempt their interest up to three thousand two hundred and twenty-five dollars ($3,225) in one motor vehicle. If you are filing jointly with your spouse, then you will be able to exempt a total interest of up to six thousand four hundred fifty dollars ($6,450). In bankruptcy, the trustee appointed to administer your case will be looking at your assets, including your vehicle, to determine if there are any non-exempt assets that could be taken and sold to re-pay your creditors some of the money they are owed. If your vehicle, in its present condition, is worth less than your available automobile exemption (as stated above) then you will be able to keep it and claim an exemption to protect it from creditors. However, if your car is worth more than the available exemption, then the bankruptcy trustee may claim an interest in your car which will need to be addressed. If you owe money on your car through a properly recorded loan then you will only need to exempt the amount of the equity in your car (if any) that exceeds the amount you owe. For example, if you owe five thousand dollars on your car and it is worth seven thousand dollars, then there would be two thousand dollars in equity subject to turnover to the trustee. However, you can use the automobile exemption to protect this equity and keep your car when you file for bankruptcy. If your vehicle exceeds the automobile exemption then there are other exemptions you may be able to apply and you should contact a bankruptcy attorney to discuss your case. Vehicles are treated differently in Chapter 13 Bankruptcy and, if you are considering filing Chapter 13 Bankruptcy, then you should discuss how your vehicle will be treated in your payment plan when you contact an attorney.