The Utah Motor Vehicle Exemption in Bankruptcy
Learn about Utah's motor vehicle exemption and whether it can help you keep your car or truck in bankruptcy.
The Utah motor vehicle exemption helps determine whether you can keep your car, truck, van, or other vehicle if you file for Chapter 7 bankruptcy. Here you’ll find information about the Utah 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 Motor Vehicle Exemption and Your Car
Utah’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 Utah’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 Utah's Motor Vehicle Exemption
In Utah, you can exempt up to $5,000 in equity in your car or other vehicle.
Example. Jon owns a 2005 Honda Civic. He owes the dealership $1,000 for the car, and the car is worth $3,000. In Utah, Jon would be able to protect his car in a Chapter 7 bankruptcy because the $5,000 motor vehicle exemption is enough to cover the $2,000 of equity in Jon’s car.
The Federal Motor Vehicle Exemption
Some states allow bankruptcy filers to use the Federal Bankruptcy Exemptions instead of state exemptions, but Utah is not one of these states.
Can Married Couples Double Utah's Motor Vehicle Exemption?
Some states allow married couples filing a joint bankruptcy petition to double the listed exemption amounts. Utah allows married couples to double the motor vehicle exemption and protect up to $10,000 in equity.
What Vehicles and Insurance Are Covered by the Motor Vehicle Exemption?
Utah has quite a few limitations on what vehicles are covered by the motor vehicle exemption. First, you can only use it to protect one motor vehicle, such as a car or truck. In addition, you cannot use the exemption to protect vehicles designed or used primarily for recreational purposes. You can only protect a motorcycle or van if you use it for daily transportation. Utah law does not protect "off-highway" vehicles, such as motorcycles (unless used for daily transportation), all-terrain vehicles (ATVs), or snowmobiles, or "recreational vehicles", such as vans (unless used for daily transportation), motor homes, or trailers.
You can protect insurance proceeds from the loss or damage of your vehicle, as long as the vehicle itself would have been exempt under Vermont law. You can protect insurance proceeds for up to one year after they are received and as long as the funds are traceable to the exempt property.
Utah’s Tools of the Trade Exemption
In Utah, you can protect up to $5,000 of equity in "tools of the trade," meaning property you use to carry on your trade or business. If you use your vehicle to carry on your profession, for example, a delivery truck, you can protect additional value under this exemption. Note that using your vehicle to commute to and from work will generally not qualify the vehicle as a tool of the trade.
Checking Utah's Exemption Laws
You can find Utah's motor vehicle exemption at Utah Code Ann. Section 78B-5-506(3).