California Auto Exemption: Can I Keep My Car if I File for Bankruptcy in California?
The California 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 California 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.
California’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 California’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.
The Amount of California’s Motor Vehicle Exemption
California has two sets of exemptions that can be used in bankruptcy – called System 1 and System 2. You can choose whichever system works best for you. In California’s Exemption System 1, you can exempt up to $2,725 of the equity in your car or other vehicle. In California’s Exemption System 2, you can exempt up to $3,525 in car equity.
If you are using California’s System 2 and your car equity is more than $3,525, you may be able to cover the extra equity by using a wildcard exemption. California’s System 2 wildcard exemption allows you to exempt up to $1,175 of any property. You can also apply any unused portion of the homestead or burial plot exemption (which is $22,075) to any other property, including your car. California’s System 1 does not have a wildcard exemption.
Some states allow married couples filing a joint bankruptcy petition to double the listed exemption amounts. California’s System 1 does not allow married couples to double the motor vehicle exemption. California’s System 2 does not allow married couples to double any exemption – which means you can’t double the motor vehicle or wildcard exemptions.
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