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Sometimes, Bankruptcy Debtors Just Get Lucky: Chapter 7 Debtor Keeps Non-Exempt Car

By Jonathan Alper

I went to a trustee meeting last week with a single debtor who owned a car free and clear. The car blue book value was $10,000. The debtor said the car "needed work" and that she had a repair estimate of $3,000. I looked at the estimate and most of the items were normal maintenance- new plugs, new belts, brake job etc. There was a single scratch on the exterior. In the debtor?s best case, this car had approximately $6,000 non-exempt equity which amount the bankruptcy trustee could demand from the debtor. 

Before the meeting, my client was very upset about her car. She was unemployed. She lived with a family member who also was unemployed. She had no money and no prospect of future employment to buy back the non-exempt car equity from the trustee. Without a car, she said she had no way to look for a job or to go to a job if she found one. Things looked bleak- I explained that the trustee is not a bad person who is only doing his job by going after the $6,000 car equity.

 So, the debtor tells the trustee about why she filed bankruptcy. She had to quit her job because she was being stalked by a neighbor and because her mother was very ill. She moved in with a relative because she had no money. She used credit cards to survive. Employment prospect were bleak in her home town.

The trustee never mentioned the car issue. The debtor had previously given the original car title and a picture of the car to the trustee. The trustee handed the debtor the car title without comment. The trustee left the meeting and drove home in the car. The trustee is very experienced and competent; he knew about the car equity. This debtor who had suffered a series of personal misfortune got a big break at the trustee meeting, and I don?t know why. Sometimes in bankruptcy you just get lucky.

Full post as published by Florida Bankruptcy Law on June 28, 2010 (boomark / email).