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Ellen
Ellen, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36714
Experience:  Bankruptcy Lawyer. Experienced.
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I live in AZ and am getting ready to file chapter 7 bankruptcy. I

Customer Question

I live in AZ and am getting ready to file chapter 7 bankruptcy.

I have 2 vehicles which are free and clear of any title liens.

1 is a 94 Mercedes E420, value <$5K
1 is a 06 Honda Odyssey, value ~$18

I have 6 kids, and the van is the only vehicle that can handle all of us. We are told that we must sell it and buy another car. But there aren't any 8 passenger cars suitable for us.

Some say to finance a new one, but we're not sure how much new car to get as we don't want to get too much. We tried getting a title loan on the current van, but were denied.

Let's say for argument that we sell our van for $17K and go to buy a similar one for $25K. We would now have a loan against it, but probably have $17K equity in it, would that vehicle be protected under the law? Also, after filing, the loan on that vehicle would not be a hardship.
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  Ellen replied 7 years ago.

Hello,

 

Thank you for your question. I am happy to assist you.

 

 

As an individual, there are two types of bankruptcy available. A Chapter 7 and a Chapter 13. There are distinct differences in between a Chapter 7 and a Chapter 13 bankruptcy.

 

A Chapter 7 bankruptcy could discharge (erase) all of your unsecured debt such as credit cards, judgments and personal loans. It would be an opportunity for a fresh financial start. However, you may have to surrender assets that exceed your exemption.

 

A Chapter 13 bankruptcy is a repayment plan for an individual. It may require that you repay some of your unsecured credit card debt over a 3 -5 year period. However, you may retain assets that exceed your exemption.

Here are the exemptions for Arizona:
http://www.bankruptcyinformation.com/AR_exemp.htm

 

 

I hope that the information which I provided was helpful to you.

Customer: replied 7 years ago.
Thank you for your response. My question is: If I purchase a $25K car (incurring a loan) using the $17K from the sale of my current vehicle, will it be protected in the Chapter 7 bankruptcy?
Customer: replied 7 years ago.
The link you sent was for Arkansas, we are in Arizona. Thanks.
Expert:  Ellen replied 7 years ago.

Hello,

 

Here is the correct link. http://www.bankruptcyinformation.com/Az_exemp.htm

 

 

No it would not be. Only 1500 per debtor (3000 for a joint filing) is exempt. Sorry

Customer: replied 7 years ago.
How would you suggest that we protect our car?
Expert:  Ellen replied 7 years ago.
I am not aware of anyway that you will be able to protect 8K in equirty. Consider putting less money down to reduce your equity.