To quickly discharge eligible debts, Chapter 7 bankruptcy occasionally requires filers to liquidate some of their assets. Those requesting a discharge of unsecured, non-priority debts must first allow the court-appointed trustee who is assisting with their case to liquidate or sell certain assets. They use the funds generated to reduce the total amount the filer owes.
After liquidation occurs, the filer is then eligible to discharge specific debts. Many people can complete a bankruptcy without actually liquidating any of their resources. There are exemptions in state law that allow people to protect certain property from liquidation. What about vehicles?
Exemptions can protect vehicle equity
Personal vehicles can be an important tool for people rebuilding financially after bankruptcy. People typically need transportation to work. They can also minimize their expenses by having their own vehicle instead of using on-demand services for transportation.
Current bankruptcy statutes in Ohio allow for partial vehicle equity protection. Individuals filing for bankruptcy can protect up to $5,025 in equity. Married couples filing jointly can double that basic exemption.
For those who have more vehicle equity than the exemption currently available, it may be possible to use the wild card exemption to preserve up to $1,675 in additional vehicle equity. Filers in Ohio must use state exemptions, as state law does not accept federal exemptions.
Making effective use of bankruptcy exemptions can help Chapter 7 bankruptcy filers limit their losses and protect their most valuable assets. Vehicle exemptions help people maintain their source of transportation, which can be important for supporting their families, continuing their careers and building financial stability after filing for bankruptcy.