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Will you lose your car if you file for Chapter 7 bankruptcy?

On Behalf of | Mar 16, 2022 | Chapter 7 Bankruptcy |

When things are not working out with your finances, and you are thinking of filing for bankruptcy, it is never an easy decision. You are constantly worried about what the future holds, given the current state of affairs.

You may be wondering whether you will keep some of your prized assets, like a vehicle you hold dear, because it has been passed down your family for generations. Below are the aspects of North Carolina laws that will answer your question.

It depends on the value of the car

Bankruptcy is not meant to leave you destitute, which is why individuals who file for bankruptcy are allowed to keep some assets or property up to a certain value. For example, when it comes to your vehicle, you are allowed an exemption of up to $3,500. It means that if your car is below that value, you can get to keep it by having it exempted from the bankruptcy trustee.

However, if your car is worth more than $3,500, you can use your additional wildcard exemption of $500 to protect it or up to $5,000 of the unused homestead exemption. Should the amount still not be enough, you may end up losing the car.

When did you buy the car?

If you purchased the vehicle within 90 days of filing for bankruptcy, the exemptions will not apply. This is meant to prevent individuals from taking advantage of the bankruptcy process.

Protecting your interests

Knowing what bankruptcy exemptions will apply for your case can be somewhat complicated since not everything is as straightforward. Therefore, it is advisable to learn more about navigating the whole bankruptcy process before getting started.

It will ensure that you know what to expect along the way and help you ascertain the financial position you will be in after everything is finalized.

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