What happens if we exceed the exemption limit on our vehicles?

[minnesotakent]

What is the name of your state?Minnesota

Here's the situation:

My wife and I will need to file BK this summer. Minnesota exemptions allow for one car with a limit of $3,600. Since we will be filing as a couple we can double the exemption limit.

We own three cars that are fully paid for. One car is worth about $1,000. The second car is worth about $2,000. The third vehicle is worth about $15,000.

We can claim two cars with a limit of $7,200. But we own three cars worth a total of $18,000.

What will likely happen in this situation?

 

[AttorneyOney]

First, you may want to read the exemption statutes very closely. Sometimes they allow a debtor to exempt one car. That kind of statute is typically construed so that each spouse can apply their exemption to a car, but two spouses can't aggregate their exemptions to shelter any single car or more than two cars.

Second, the bankruptcy trustee will want to take all your non-exempt assets and sell them for the benefit of your creditors. Debtors can typically pay the trustee the same amount in cash that he would realize from the sale in order to keep the asset. Whether the trustee would actually bother depends on a great many things, prime among them the amount of your debts and other assets. Only a local bankruptcy attorney could give you a reading on that.

 

[Ladynred]

I might also ask you how you're arriving at the value of the vehicles ?? If you're using Kelly Bluebook - don't. YOu need what they call a 'blackbook' value and that is usually quite a bit less than KBB. A Trustee would want a fast-turnaround on a sale, and he/she would likely never get a KBB price.

Check the value here, then see where you stand:

http://www.carquotes.com/blackbook.asp