Will I lose my car if I file Chapter 7 bankruptcy?

April 28, 2020
Will I lose my car if I file Chapter 7 bankruptcy?
Kelly Bankruptcy
Will I lose my car if I file Chapter 7 bankruptcy?

Apr 28 2020 |

/

Show Notes

Transcript:

Hello, this is Georgia bankruptcy attorney Jeff Kelly, and the title of this podcast is Am I Going to Lose my Car if I File a Chapter 7? As of the recording date here, there are over 22 million unemployed people in this country due to no fault of their own. It is just a product of this Corona disaster. It’s expected by the end of April we might have over 40 million people unemployed. And a lot of people have questions about Chapter 7 and one of the most common ones I get as a bankruptcy attorney is am I going to lose my car? And the answer to that question is – almost all legal questions is, it depends. So let’s talk about why 99% of the people who file a Chapter 7, don’t lose their car. Well, let’s go through some hypotheticals. Let’s say you’ve got somebody, they have worked so hard, their car is paid for. Let’s say it’s worth about $5,000. They have tons of medical debt, tons of credit card debt. All that gets eliminated in a Chapter 7 and the car wouldn’t be a problem because in Georgia, there is a $5,000 exemption for cars. So that takes care of hypothetical number one. Let’s change it up a little bit. Hypothetical number two, let’s say the car is worth $10,000. You know what? It’s still not going to be a problem because we also have a $10,000 wildcard exemption. So actually you could bump the value up to $15,000, assuming we don’t have to use that wildcard exemption on other things. So as a general rule, that’s not going to be a problem either.

Now, let’s create a hypothetical just for kicks, where somebody would lose car. Let’s say that car is paid for and it’s worth $30,000. I think you’re going to have a problem filing a Chapter 7 trying to keep that car. Does that mean you have no options at all? Well, what if you owe a $100,000 in credit cards, what are we going to do? Well, are we going to have to pay back a $100,000 in credit cards? The answer, no, we’re not. What we would probably do in that situation is we’d file a Chapter 13 and we would have to pay back to the creditors the same amount of money they would get if you were to file Chapter 7. So let’s say the car’s worth 30,000 and let’s say I can exempt $15,000 of it. That’s going to leave $15,000 exposed equity. And so we could, in theory and I’m just trying to keep the numbers clean here. There’s other you could do here, but just for argument’s sake, we pay back $15,000 to the unsecured creditors in a three to five-year Chapter 13 plan. And we would keep the car in a Chapter 13.

Now if I did Chapter 7 though, let me give you — I want to tell you another story. I had this guy once, a few years back and he came in to meet with me to file Chapter 7. We spent about two hours going through his petition, making sure that it’s perfect. That’s what we do with every petition. I got to know him during that time, but he didn’t feel comfortable with me until the very, very end. He’s like, “I really feel like you’re a good guy. So I guess I might as well tell you.” I looked at him like, “Buddy, I’m your attorney. I’m on your side. You can tell me anything. It’s confidential and you better tell me because I can’t give you legal advice about something that you don’t ask me the question about. So what’s going on?” And he looked at me and he said, “Hey, they can’t take your car, can they?” I said, “Well, it depends. What are we talking about?”

Well, in his specific case, he was talking about a Corvette; a 1964, fully restored Corvette. And the reason he did not want to ask me about it is he was afraid of the answer that he would get. It was a car that he and his dad had worked on for years and restored. His dad had passed away and it was all he really had left of his dad. So can a Chapter 7 trustee take that car? That’s a very compelling story. It’s his last thing he has to remember his dad. Surely they’re not going to take it right? Wrong! All that matters is the value. And that thing was worth like $65,000.

So what did we do in his case? In his situation, there’s no way he could’ve made a Chapter 13 work. We didn’t file the case. I’m not sure how he handled his other debt or what went down. I don’t know if he ended up selling the car and paying some of the debts off. I don’t know, but honesty is a core value of my law firm. We are going to be honest with you. We’re going to shoot straight with you. We’re going to tell you what really will happen in court after we analyze your situation. If you’ve got any questions about how Chapter 7 applies to you, and I want to emphasize this. Don’t hear this podcast and don’t read stuff on the internet and make assumptions about your case.

If you want to know how the law applies to your specific case, take advantage of a free consultation and get free legal advice. It is a no brainer. It is the obvious smart choice. Give us a call – (770) 881-8449 and if you get a chance, check out my website, www.kellycanhelp.com. I’ve written a book on Chapter 13 and Chapter 7, and I would like for you to get a copy of it. So please go to my homepage and scroll down to the very bottom typing your email address and boom! We will get you a copy. If you would rather have a hard copy, give us a call and we’ll try to shoot one out in the mail to you.

Thank you very much for tuning in. Have a great day.

Other Episodes

Episode

April 14, 2019
Episode Cover

What is a Motion For Relief in Bankruptcy Court?

Transcript: Hello, this is Georgia bankruptcy attorney, Jeff Kelly and this evening I am going to talk about a motion for relief. Okay, if you are in an active chapter 13 case, and you receive a motion for relief, as a general rule, this is not a good thing. Let me tell you why. Let’s say you are in a chapter 13 and you are making payments on your house, but you know, hours get cut back at work, maybe some type of emergency pops up out of nowhere and you miss a few payments. Well, the creditor is going to respond by filing a motion for relief. Basically, a motion for relief from the automatic stay is a request from a creditor to the bankruptcy court for permission to take back collateral. In other words, if the creditor has rights to your house, they want permission to get out of bankruptcy court and start foreclosure. proceedings. Oftentimes we’ll have a client, they’ll come in and they say, Well, you know, I’m not sure I buy all this stuff about how chapter 13 protects you because I had a friend who filed, but they still lost their house. How does that happen? Well, here’s how it happens. Somebody files chapter 13. They put the IRS in the plan, and all they have to do is make the future mortgage payments. But like I said earlier, sometimes things happen. And when you miss ...

Listen

Episode

February 13, 2020
Episode Cover

How a cheap divorce can lead to a bankruptcy nightmare.

Transcript: Hello, this is Jeff Kelly. And in this podcast I would like to talk about how getting a cheap divorce can set you up for a possible bankruptcy disaster. Okay, the first way that I often see it and it’s usually in almost every case, the wife that’s left with the children is so desperate to get rid of nasty, horrible husband, that she will agree to anything without a lawyer. She signs the papers and literally gives everything to him. I cannot believe how often I see this situation. Go get an attorney. There are some attorneys who will defend mothers with children and they’ll collect all the attorneys fees from the the ex husband so it’s really tragic sometimes when I you know, I see Women with kids come in and there’s just not enough money to make the mortgage payment not enough money to cover electricity bills. In those situations, you know, honestly, bankruptcy doesn’t help if we’re in a house that you need to stay in and the future mortgage payments are too high. Maybe man, I hate it. And in most cases, it’s almost impossible to go back and undo a bad divorce. It’s much better to get an attorney from the beginning and avoid those rough situations. Another thing that I see that’s often very common is people will, you know, do the no fault divorce, no attorney and one spouse will sign their interest in the house over to the other spouse, and they’ll do it in ...

Listen

Episode

July 01, 2019
Episode Cover

Is it a Sin To File Bankruptcy?

Book. Transcript: Hello, this is Jeff Kelly and Today is July 1st, 2019. Today I want to talk about, “is it a sin to file bankruptcy?” We actually got this question from a potential client this past week. I’ve been a bankruptcy attorney for, gosh, over 21 years now. So, do I believe that is a sin to file bankruptcy? Absolutely not. Of course, it’s not. What a lot of people are really shocked to find out is that our entire bankruptcy system was actually inspired by the Bible. If you don’t believe me, go check it out yourself. Deuteronomy chapter 15 talks about this thing called the Jubilee where all the debts got wiped out every seven years.  Now personally, I believe that God did not want Israel to be a nation of economic slaves. So, there is a safety valve here called the Jubilee. Well, this country was founded by people who did read the Bible and I believe they were inspired to create a bankruptcy system. And they believed in it so strongly that it’s actually written into the United States Constitution. It’s been there since the beginning, because these guys did not want to have a nation of economic slaves. And it makes sense. If you’re going to allow people to charge high interest rates, or if we’re going to allow interest to be charged at all. You got to have a ...

Listen