The Rhode Island motor vehicle exemption, which is $12,000 for individuals and $24,000 for married couples, may help you keep your car, truck, van, or other vehicle if you file for Chapter 7 bankruptcy. Read on to find out more about the RhHere you’ll find information about the Rhode Island car exemption: 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 Rhode Island Motor Vehicle Exemption and Your Car
Rhode Island’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 Rhode Island’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 Rhode Island’s Motor Vehicle Exemption
In Rhode Island, you can exempt up to $12,000 in equity in your cars or other vehicles.
Example. Sally owns a 2008 Toyota Prius worth $13,000. She owes the dealer $4,000 on the loan, so there is $9,000 of equity in her Prius. Sally also owns a 2003 Ford Ranger worth $2,500, for which she owes no money. Between the Prius and the Ranger, Sally has $11,500 of motor vehicle equity. If Sally files a Chapter 7 bankruptcy, she can use the Rhode Island motor vehicle exemption to fully protect both of her vehicles.
The Federal Motor Vehicle Exemption
Rhode Island allows you to choose between the state exemptions or the federal bankruptcy exemptions. The federal motor vehicle exemption amount changes every three years. To find the current amount, see our article The Federal Bankruptcy Exemptions. It's much less than the Rhode Island exemption.
Using Rhode Island’s Wildcard Exemption to Protect Your Car
If the equity in your car is more than $12,000, you may be able to cover the extra equity by using a wildcard exemption. The Rhode Island wildcard exemption allows you to protect up to $5,000 of equity or value in any assets you own, including your vehicles.
Example. In addition to her Prius and Ranger, Sally owns a motorcycle worth $4,000, so she has a total of $15,500 of equity in her three vehicles. She can use the Rhode Island motor vehicle exemption to protect $12,000 of equity. That leaves $3,500, which Sally can protect using the Rhode Island wildcard exemption.
Can Married Couples Double Rhode Island’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 Rhode Island motor vehicle exemption to protect up to $24,000 of vehicle equity.
(To learn about the advantages and disadvantages of joint bankruptcy filings, see Nolo's section on Bankruptcy Options for Married Couples).
What Vehicles and Insurance Are Covered by the Motor Vehicle Exemption?
The Rhode Island motor vehicle exemption allows you to protect any and all of your motor vehicles, such as cars, trucks, vans, and motorcycles.
Other Information About Rhode Island’s Vehicle Exemption
Rhode Island has a tools of the trade exemption that allows you to protect up to $1,500 in “working tools” that you use in your profession. If your vehicle is specifically equipped for the purpose of your profession, such as a tow truck, you might be able to use this exemption to protect additional equity. While some states allow you to protect “equipment” used in your profession, Rhode Island’s tools of the trade exemption is specific, allowing you to protect only “tools,” so you should consult a local bankruptcy attorney to help determine whether your vehicle might qualify for this exemption.
Checking Rhode Island’s Exemption Laws
You can find Rhode Island’s motor vehicle exemption at R.I. Gen. Laws Section 9-26-4(13).
You can find the Rhode Island statutes on the website of the Rhode Island General Assembly at www.rilin.state.ri.us/statutes/. To learn how to find state statutes, see Nolo’s Laws and Legal Research area.