Can you keep your car and file for bankruptcy in Minnesota? The answer will largely depend on three factors:
1. Can you afford to maintain payments after bankruptcy?
2. What is the value of your car?
3. Has your car been modified due to a disability?
Maintaining Payments After Bankruptcy
Secured debts, such as car loans, need to be maintained after bankruptcy. Failure to make payments as usual can result in repossession. In most states, debtors will be required to sign areaffirmation agreement if they wish to keep their car. To learn more about reaffirmation agreements, click here. In addition, you may want to discuss how chapter 13 bankruptcy can lower your car payments when you meet with your attorney.
What is the Value of Your Car?
Under Minnesota bankruptcy laws, debtors can protect up to $4,400 of equity in a car. Equity is determined by subtracting the amount of any loan from the blue book value of your car. If there is $4,400 or less after you run the numbers, your car will be classified as exempt, meaning the bankruptcy trustee can’t touch it. Even in the event equity exceeds $4,400, it is likely that your bankruptcy attorney can make a deal with the trustee to “buy-out” the non-exempt value of your car with a cash payment. Trustees don’t really want to sell your stuff, they are often willing to entertain settlement offers.
Has Your Car Been Modified Due To a Disability?
Minnesota bankruptcy laws significantly increase the car exemption to $44,000 in the event an automobile has been modified to accomodate a disability. If you have invested heavily in your car because of an illness, Minnesota bankruptcy laws will likely shield the value of these improvements allowing you to retain your car through the bankruptcy process.
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