When filing for bankruptcy, many people worry about losing their vehicle. Fortunately, in Kansas and Missouri, there are exemption laws that help protect your car, but the outcome depends on your specific circumstances. Here’s what you need to know about keeping your car during bankruptcy.
Kansas Exemptions for Your Car
In Kansas, the law allows you to exempt certain personal property from being seized in bankruptcy, including your vehicle. However, there are restrictions:
Exemption Limits for Cars:
- You can exempt up to $20,000 in equity in a vehicle that is used regularly for personal transportation. This usually means the car you use for commuting to work or other essential tasks.
- If both you and your spouse are filing jointly, the exemption can be doubled, allowing you to protect up to $40,000 in equity in a car.
- Handicapped Vehicles: If your vehicle is specially adapted or designed for handicapped use, the $20,000 limit does not apply. This means you may be able to protect a higher-value vehicle.
What if You Have More Than One Vehicle?
- If you own a second vehicle, and it’s worth more than the exemption limit, it may be considered non-exempt, meaning the bankruptcy trustee could potentially sell it to pay creditors.
- However, exceptions and alternative options may apply depending on the specifics of your case and whether you file under Chapter 7 or Chapter 13.
Missouri Exemptions for Your Car
Unlike Kansas, Missouri exemptions are less generous. The exemption for personal property, including a car, is typically $3,000 for an individual. If your car’s equity exceeds this amount, it could be vulnerable to liquidation by the bankruptcy trustee.
It’s essential to explore all options and consult with a bankruptcy attorney.
Chapter 7 vs. Chapter 13 Bankruptcy: Impact on Your Car
Chapter 7 Bankruptcy
In Chapter 7, the trustee will sell your non-exempt property to repay creditors. If your car’s equity is above the exemption limit, it might be sold. However, if your car falls within the exempted value, you can keep it. The trustee will also give you the option to pay the value of the vehicle to your case so you can keep the vehicle.
Chapter 13 Bankruptcy
With Chapter 13, you enter a repayment plan for 3 to 5 years. Even if your car has significant equity, you can usually keep it by paying its value to creditors through the repayment plan. In Chapter 13, the focus is on preserving assets through structured payments.
What Happens After Filing?
Once you file for bankruptcy, an automatic stay is put in place, stopping most collection actions, including efforts to repossess your car. This gives you the time you need to resolve the issue with the bankruptcy court.
Will Someone Take My Car?
In most cases, if your vehicle qualifies for an exemption, it is unlikely that the bankruptcy trustee will take it. If the equity exceeds the exemption limit and there are no alternative protections available, the trustee might sell it. However, in many situations, you may be able to work out a solution.
Is Your Car Safe?
Your vehicle’s safety in bankruptcy depends on its value, how much equity you have, the type of bankruptcy you file, and state-specific exemptions. It’s always best to have a detailed conversation with a bankruptcy attorney to understand the full implications.
Get a Free Bankruptcy Consultation
If you’re concerned about your car during bankruptcy, we encourage you to schedule a free consultation with our Kansas City bankruptcy attorneys. We’ll assess your situation and give you clear advice on how to protect your vehicle and other assets.
