Filing for bankruptcy wouldn’t be a good way to go if you had to give up things that you need for your employment. Fortunately, most states allow you to exempt (protect) the equipment necessary for you to work in your profession up to a certain dollar value. Therefore, in most cases, it’s likely that you’d be able to keep an inexpensive work truck if you filed for bankruptcy.
You don’t have to surrender all of your assets when you file for bankruptcy. Each state lists the things its citizens will need to maintain a home and employment in its exemption statutes. These laws allow you to keep, or “exempt,” the following types of items:
One of three (or more) frequently used exemptions might allow you to keep your work truck. Here’s a brief description of each:
If you aren’t able to use an exemption to protect the full value of your truck in a Chapter 7 bankruptcy, it’s likely that the bankruptcy trustee—the official appointed to manage your case—will let you pay for the nonexempt value. Also, if you keep the truck, the trustee won’t have to sell it. Some trustees will discount your payment amount to reflect the cost savings.
Another option to consider is that of filing a Chapter 13 case. Why? You’re allowed to keep all of your property. The catch is you must pay the value of your nonexempt property—the portion of your truck that isn’t covered by an exemption—to your creditors over the course of a three- to five-year payment plan. (You’ll likely have to pay additional amounts, too.)
Each bankruptcy case is unique. The purpose of this article is to provide information about bankruptcy principles only. To determine whether you can protect your particular truck, you’ll want to consult with a bankruptcy lawyer.