Filing for Chapter 7 bankruptcy may give you relief from your burdensome debts. However, you might have to sell off some of your property to pay off debt that you cannot discharge. Fortunately, state bankruptcy law allows you to exempt some of your property from liquidation.
Florida law permits exemptions of specific kinds of property like your home, provided it meets legal requirements. The state also designates vehicles as exempt property under certain circumstances.
Requirements for vehicle exemption
According to the Florida Bar, your automobile should have a value of no more than $1,000 in order for you to claim it as an exemption. If the vehicle possesses a value higher than $1,000, minus all debts that have the vehicle as collateral, creditors may claim it to pay off your debts.
However, you might have a way to exempt a more expensive vehicle. The Florida Bar explains that you may combine exemptions to save your vehicle. Florida residents have a $4,000 exemption for personal property. A possible option is to combine the personal property exemption with your $1,000 vehicle exemption to reach $5,000 to exempt your vehicle.
Jointly held vehicles may be exempt
You may also protect a vehicle if you own it with a spouse. Jointly owned property is tenancy by the entirety, which creditors cannot claim. However, creditors might invalidate the exemption if you had recently transferred some or all of your vehicle ownership in order to keep it from creditors. Conversely, if you have jointly owned the vehicle for a number of years prior to your financial troubles, creditors may not have a strong case.
Even if the police or a judgment creditor takes your vehicle, you might get it back if it fulfills exemption requirements. You could file an affidavit of exemption with the court to request that you receive back your vehicle. To sum it up, you might have one or more options to help you if you want to keep your vehicle as you pursue bankruptcy.
