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Vehicle is worth more than 5000…what now?

I am about to file for bankruptcy, but am hesitant as my vehicle is worth more than the exempt amount of 5000 – it`s appraised at 6500. What happens now? If I lose my vehicle my situation becomes even worse!

Posted from: British Columbia

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One Response to “Vehicle is worth more than 5000…what now?”

Barton Goth – Goth & Company Inc. -Trustee in Bankruptcy said...

When you have a vehicle that is worth more than the exemption limit in your province you have two choices.

First you can sell the vehicle, keeping the amount of the exemption for yourself and the remainder paid into the bankruptcy estate.

The second alternative is that you can re-purchase the non-exempt portion of the vehicle from the bankruptcy estate. Meaning, if your vehicle is worth $1500 more than the exemption limit, you can pay $1500 in addition to your bankruptcy cost, so that you can keep this vehicle. The logic is that this $1500 belongs to your creditors, but your creditors don’t care where the money comes from (i.e. you can purchase or the vehicle can be sold), all they want is their share.