Can I Keep Multiple Vehicles in a Bankruptcy?

Yes, most of the time.  The federal bankruptcy laws allow you to protect certain property by using state exemptions to protect the automobiles.  However, you can only protect up to a certain amount of equity in a vehicle.  For example, North Carolina allows you up to $3500 in a motor vehicle exemption to protect one vehicle per person filing bankruptcy.  Therefore you can have a vehicle that is bought and paid for to have a value up to $3500 using the motor vehicle exemption and protect the vehicle.  What if you have two vehicles titled in your name that are paid in full and have a total value of $6000?  Generally speaking you cannot protect, in full, both vehicles unless you have some “wildcard” exemption left over to use to help protect the second vehicle.  This wildcard exemption will be discussed on another topic, but it usually allows $5000 per person filing the bankruptcy to protect “other” property.  However there are exceptions, so check with an attorney at Duncan Law for specific advice.

Frequently Asked Bankruptcy Questions

Another unusual scenario is you hypothetically have ten brand new 2011 Mercedes each worth up to $100,000 each. However, you owe $100,000 on each vehicle.  Therefore you have no equity in the ten vehicles. With no equity in the vehicles, you can have ten new Mercedes worth one-million dollars and be able to keep all the vehicles, as long there is no equity and you continue to make you payments on the vehicles.  This is usually valid in a Chapter 7 bankruptcy, however most Chapter 13 bankruptcy Trustees will not allow you to keep excessive vehicles that you do not need.

What if you have an old run down 2000 Mazda that is paid off in full, worth only $4500.  Remember, without your wildcard exemption you can only protect $3500 in value.  Therefore you have $1000 in excess equity and the Chapter 7 could seize the vehicle and sell it.  You would get the first $3500, the Trustee would receive anything in excess of $3500.

In conclusion, it doesn’t seem fair, you could lose the one old car that is paid for, but keep the ten new Mercedes since there is no equity in the vehicles. That’s why you need help from Duncan Law.