Our Beloit Bankruptcy Law and Rockford Bankruptcy Law clients are understandably concerned just prior to declaring bankruptcy—clients are still wrestling with the irony of taking a positive step forward that also happens to cause the potential loss of several core assets.
But it’s important to seek guidance from an experienced Beloit Bankruptcy Law attorney, because you may stand to keep more than you may initially think.
Although you’re liable to lose certain property during bankruptcy in order for your trustee to repay creditors, bankruptcy law protects certain assets called “exemptions.”
In a previous blog post, we covered Homestead Exemption in Wisconsin and Illinois. And today we’ll look at a similar law:
Motor Vehicle Exemption
What is Motor Vehicle Exemption?
At its core, Motor Vehicle Exemption determines whether you are able to keep your car when declaring bankruptcy.
In order to find out if you stand to benefit from Motor Vehicle Exemption, you must first calculate the equity you have in your car—the replacement value of your car minus any remaining auto loan balance (if applicable).
If the resulting value is positive—i.e. your car’s replacement value is $10,000 and you still owe $5,000, giving you $5,000 remaining—then you have positive equity in your car and may be eligible for Motor Vehicle Exemption.
However, Motor Vehicle Exemption amounts vary by state; so if you’re a resident of either southern Wisconsin or northern Illinois, make sure to speak to a Beloit Bankruptcy Law or Rockford Bankruptcy Law attorney to learn more.
How is Motor Vehicle Exemption Different in Wisconsin and Illinois?
There are 3 versions of Motor Vehicle Exemption that will be most relevant for our Beloit Bankruptcy Law and Rockford Bankruptcy Law clients:
Federal 11 U.S.C. 522(d)(2)
Federal Motor Vehicle Exemption allows for an individual to protect up to $3,750 equity applied to one car, while allowing married couples to protect upwards of $6,900.
Federal exemption also allows for individuals to use the Wildcard Exemption—an exemption that can be used to protect any type of property— for additional coverage.
In Wisconsin, an individual is protected for up to $4,000 in equity, but Wisconsin residents can also add the unused portion of the Consumer Goods exemption for additional coverage up to $12,000.
Similarly, married couples can protect up to $8,000 while also able to add the unused portion of the Consumer Goods exemption for additional coverage up to $24,000.
Illinois 735 ILCS 5/12-1001(c)
In Illinois, an individual is protected for up to $2,400 in equity of a single vehicle, and as with Federal exemption, the Wildcard Exemption can be used for additional coverage of up to $4,000.
Married couples are protected for up to $4,800 in equity, and can use the Wildcard Exemption for additional coverage of up to $8,000.
How Can You Find Out If You’re Eligible?
Remember to seek the counsel of an experienced Beloit Bankruptcy Law or Rockford Bankruptcy Law attorney when considering bankruptcy to find out if you’re eligible to benefit from Motor Vehicle Exemption.
If you’re considering bankruptcy contact us at The Fitzgerald Law Firm for a free initial consultation. At The Fitzgerald Law Firm we understand meetings may not be possible during traditional business hours—let us know and we’ll do our best to make ourselves available at a time convenient for you.