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How much vehicle value can you exempt in a Chapter 7 filing?

On Behalf of | Aug 27, 2021 | Chapter 7 Bankruptcy

Chapter 7 bankruptcy doesn’t work for everyone. Those with income above the state median may not qualify. Even people with no income may find it is not the right kind of bankruptcy for them if they have a lot of personal property. 

You do have the option of protecting or exempting certain amounts of property, but there are limits to how much property you can exempt from the liquidation process in a Chapter 7 bankruptcy. All of your non-exempt assets are subject to sale by the trustee overseeing your bankruptcy proceedings. Can you protect some of the value in your personal vehicle?

North Carolina allows you to exempt some of your equity

If you have owned your car for years and no longer make payments on it, then the overall value of your vehicle based on its condition will determine if you can exempt the vehicle from bankruptcy liquidation or not. 

If you financed the vehicle and still have to make payments on it, you need to subtract the amount you owe still on your loan from the total amount financed. The difference is the equity you have accrued. State law allows you to protect up to $3,500 in vehicle equity

If the fair market value or accrued equity in your vehicle is worth more than $3,500, you may have to refinance the vehicle to pay out that equity to creditors or possibly four go ownership of the vehicle if the trustee decides to sell it. Learning more about the exemptions available in Chapter 7 bankruptcy can help you choose the right kind of bankruptcy for your situation.


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