The Motor Vehicle Exemption in Bankruptcy
The motor vehicle exemption protects the equity you might have in a car or truck.
If you file for bankruptcy, motor vehicle exemptions protect a certain amount of equity in your car, truck, van, motorcyle, or other automobile. If all of your equity is covered by a car exemption, the trustee cannot take your car in a Chapter 7 bankruptcy. If some equity remains unprotected by an exemption, you may lose it. Motor vehicle exemptions play a role in Chapter 13 bankruptcy as well -- the value of your nonexempt property (including car equity that is not protected by a motor vehicle exemption) determines the minimum amount you must repay your unsecured creditors through your Chapter 13 plan.
Keep in mind that even if all of the equity in your car, van, motorcycle, or other automobile is exempt in Chapter 7 bankruptcy, you still might lose the car to the lender of your car loan.
The overview articles below explain how the motor vehicle exemption works in bankruptcy and other factors that determine if you can keep your car or not. Then, click on your state's motor vehicle exemption article to find out the amount of car equity your state exempts (if any), whether you can use the federal motor vehicle exemption, how to find your state's motor vehicle exemption law, and more.