If you file for bankruptcy in Maine, Maine's motor vehicle exemption allows you to protect $5,000 in car equity and more if you are married and filing jointly. You may also be able to use Maine's tools of the trade exemption protect some of your car equity. Here you’ll find information about the Maine's car and tools of the trade exemptions.: how much it is, what types of vehicles it covers, how it works for married couples, how to find the applicable statute, and more.
(For more information about exemptions, including how they work and which ones you can use, see our Bankruptcy Exemptions area. For information specific to the motor vehicle exemption, see our Motor Vehicle Exemption in Bankruptcy area.)
The Motor Vehicle Exemption and Your Car
Maine’s motor vehicle exemption plays a large role in determining whether or not the bankruptcy trustee can take your vehicle to repay your unsecured creditors. If the equity in your car is less than Maine’s car exemption, then the trustee cannot sell it. If the equity in your car is significantly more than the applicable exemption amount, the trustee is likely to sell your car to repay your unsecured creditors. For details, see The Motor Vehicle Exemption: Can You Keep Your Car in Chapter 7 Bankruptcy?
Keep in mind that even if your car is safe from the bankruptcy trustee, the lender may be able to repossess your car during or after bankruptcy. To learn more, see Your Car in Chapter 7 Bankruptcy and If You Are Behind on Your Car Payments, Can Chapter 7 Help?
The Amount of Maine’s Motor Vehicle Exemption
In Maine, you can exempt up to $5,000 in equity in your car or other vehicle.
Example. Kelly owns a 2008 Subaru Outback worth $8,000. She owes the dealer $4,000 on the loan, so there is $4,000 of equity in her car. Kelly can use the Maine motor vehicle exemption to fully protect her car.
The Federal Motor Vehicle Exemption
Some states allow bankruptcy filers to use the Federal Bankruptcy Exemptions instead of state exemptions, but Maine is not one of these states.
Using Maine’s Wildcard Exemption to Protect Your Car
If the equity in your car is more than $5,000, you may be able to cover the extra equity by using a wildcard exemption. Maine has a wildcard exemption that allows you to protect $400 of any property.
Can Married Couples Double Maine’s Motor Vehicle Exemption?
Some states allow married couples filing a joint bankruptcy petition to double the listed exemption amounts. Married couples can double the Maine motor vehicle exemption and protect up to $10,000 of equity in a vehicle.
Learn more about joint bankruptcy options in Nolo's section on Bankruptcy Considerations for Married Couples.
What Vehicles and Insurance Are Covered by the Motor Vehicle Exemption?
The Maine motor vehicle exemption allows you to protect equity in any motor vehicle, such as your car, van, or truck.
Using Maine’s Tools of the Trade Exemption
In Maine, you can also protect up to $5,000 of value in “tools of the trade,” meaning property you use to perform your job. If your vehicle is required to perform your job (simply commuting to and from work does not generally meet this standard), such as a delivery truck or tow truck, you can use this exemption to protect it.
Additionally, if you did not use the full homestead exemption, you can use the leftover value, up to $6,000, to protect tools of the trade, including your vehicle, if it qualifies as a tools of your trade.
Checking Maine’s Exemption Laws
You can find Maine’s motor vehicle exemption at Me. Rev. Stat. Ann. tit. 41 Section 4422(2).