In most states, if you declare Chapter 7 bankruptcy, or the “liquidation bankruptcy,” then all of your equity (the total market worth of your belongings) may be used to pay off your creditors. For car owners, that typically means any cars that they own will be evaluated for their equity and sold to pay off their debts.
The key thing to remember here is that the number of cars you own isn’t the issue—it’s how much they’re worth. If, for instance, you own five cars that are all worth less than $3,000 and are needed by every member of your household, then you have nothing to worry about. If you outright own two cars, but one of them is a collector’s car worth $30,000, then that car might be sold to pay off your debts. Every state has a motor vehicle exemption limit, so as long as your car’s worth falls beneath that exemption, you’ll be allowed to keep it.
At least, that might be the case for you if you didn’t live in Texas.
The Generous Motor Vehicle Exemption in Texas
Texas is exceptionally merciful to bankrupt debtors. In our state, you’re allowed to exempt one vehicle (of any value) per licensed member of your household. You can even exempt vehicles for unlicensed household members if they need someone else to operate a vehicle for them (i.e. someone with disabilities who is unable to drive, or elderly people who are no longer licensed).
If your household contains five people who are either licensed or need a licensed driver to operate a car for them, then that’s five vehicles of any value that you could exempt in a Chapter 7 bankruptcy. For car collectors, the Texas motor vehicle exemption is your greatest asset in a bankruptcy.
Huebner Law Firm, PC, an experienced and renowned Fort Worth bankruptcy lawyer, has been guiding people to debt freedom since 1998. Our firm has the tools, experience, and knowledge to help you rebuild your financial stability while preserving the things that most matter to you. If you have a car collection (or any personal belongings) that you want to ensure are exempt in a bankruptcy, speak with us in a free case consultation.
Call (817) 576-1889 for a free bankruptcy consultation today!