Can you keep your car and file for bankruptcy in Colorado?
Colorado Automobile Exemption
Colorado bankruptcy laws allow a debtor filing for bankruptcy to protect up to $5,000 of equity in a car used for work. The exemption is doubled to $10,000 if the car is used by a debtor or by a dependent who is disabled or age 60 or older. So how do you know whether you will be able to file for bankruptcy in Colorado and retain ownership of your car? Two factors will be especially important:
First, make sure that you can continue to make payments if there is a loan on the car. Exempting equity pursuant to Colorado bankruptcy law does not forgive the obligation to make your car payments. If you fail to make payments, your car lender will still be able to repossess your car.
Second, to determine how much equity you have in your car, subtract the loan amount from the appraised value of the car. You might find that you reach a negative number. In this case you have no equity in your car and will be able to retain it as long as you can realistically afford it. If the amount of equity comes out to $5,000 or less, the car will be exempt under Colorado bankruptcy laws.
If you have questions about how your assets might be affected by filing for bankruptcy, contact a Colorado bankruptcy attorney.
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