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cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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My husband & I are considering Chapter 7. He is drawing Social

Customer Question

My husband & I are considering Chapter 7. He is drawing Social Security and our small appraisal business has declined so much that we are making less than half what we used to make. Our income fluctuates from month to month depending on the amount of orders we receive and the fees have been cut in half. We have approximately $35,000 or less in unsecured credit card debt which we haven't been able to make any payments in 2 years. All we own is an older mobile home (1968) which we paid $25,000 and reside in and 2 vehicles, however one we are having to give to our son in repayment for living with him for a year when we had no work at all. Our entire social security check goes toward our health insurance premium which we feel we must keep due to my husband's diabetic condition (insulin dependent), a very bad knee and back. My question is, can they take any of your vehicles if you have 2? Also, what if we chose to simply do nothing?
Submitted: 6 years ago via Nolo Press.
Category: Bankruptcy Law
Expert:  cfortunato replied 6 years ago.

Hi JACustomer,

Each Bankruptcy filer is allowed to keep one motor vehicle with a value of $2550 or less (plus the cost to sell the car).

Given the information you provided, there is nothing the creditors can do to you if you stop paying, as you do not have significant assets, and you have no wages to garnish - unless you have more than $1350 in the bank.

Customer: replied 6 years ago.
If I have a vehicle worth more than $2550 and do not file Chapter 7, can they take it? My Social Security is $1435 per month, so can they garnish any of it?
Expert:  cfortunato replied 6 years ago.

I just noticed you purchased your mobile home in 1968. Since it is older, you will be able to use all or part of the Homestead exemption for your car, since you will not need it for your home - if you file a Bankruptcy. This will give you an additional $20,725 equity that can be applied to one or more cars. Also, if you choose this option, you will also have a $3300 motor vehicle exemption, instead of the $2550.

In any event, the additional exemption amount for a motor vehicle is only available for a Bankruptcy filing - if you do not file a Bankruptcy, creditors can take a motor vehicle if the value is more than $2550 (plus the cost to sell it). California Stat. 704.010.