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I need to do banktruptcy 7 I have about 35 thousand on credit

I need to do banktruptcy...
I need to do banktruptcy 7 I have about 35 thousand on credit cards, I have a civil penalty from the state of Arizona for $15 thousand that I'm making payments every month (i heard that i wont be able to erase this) I own 3 cars, one toyota corolla 2001, one toyota tundra 2001 year and one 1994 mercury villager, i own a rural small house where i live in the desert
county value is only $8,160
I was working as a taxicab at the moment i'm unemployed.
My question is i will be able to keep my house, do i have to many cars to bankcruptcy and what about the state civil penalty?
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Answered in 1 minute by:
10/17/2013
A.J.
A.J., Attorney
Category: Bankruptcy Law
Satisfied Customers: 4,300
Experience: Experienced consumer bankruptcy attorney.
Verified

A.J. :

Hello, and thank you for using Just Answer. My name isXXXXX am a bankruptcy law professional, and I look forward to answering your question this afternoon.

A.J. :

First, in a chapter 7 bankruptcy, there are generally "exemptions" that apply to property that prevent a good portion of property from being seized by the trustee (who is the person in charge of administering a bankruptcy estate). In California, there are two distinct sets of exemptions, both with advantages and disadvantages, that a bankruptcy debtor can choose from.

A.J. :

The first is the one with the largest homestead exemption (protection of the home), and includes protection of up to $75,000 in equity in the home. So, with a home value of only $8160, in a chapter 7 bankruptcy the home should be protected without much trouble. The vehicles, on the other hand, may be a different issue. Using the homestead exemption option to protect the home includes a motor vehicle exemption of up to $2750. This is likely enough to cover one of your vehicles, as they are all older, but not enough to cover the others.

A.J. :

The question would then be whether or not the other vehicles have sufficient value for the bankruptcy trustee to want to take them and sell them. The '94 mercury villager, for example, may not be worth the hassle and expense for the trustee in seizing it and selling it. If the cost of seizure and sale does not justify the amount that they could get, they may choose not to seize an asset. However, just be aware that, after the $2750 motor vehicle exemption, at least theoretically a trustee could seize any other vehicles not covered by the exemption.

A.J. :

Now, having said that, because the value of your home is relatively small, system 2 may actually be a better option for you, and allow you to protect more of your vehicles. In system 2, you can still protect up to $24,000 of equity in a home, and then there is also a wildcard exemption that could be applied to the vehicles of a little over $1000, plus any unused exemption from the homestead exemption could then be used for the vehicles as well (this is allowed only in system 2 exemptions in California.)

A.J. :

So, under system 2 of the wildcard exemptions allowed in California, the assets you listed should be protected from seizure by the bankruptcy trustee. That is the good news.

A.J. :

The bad news is that the civil fine (presumably owed to the state) is likely not dischargeable in a chapter 7 bankruptcy.

Customer:

What about my civil penalty? as long my cars are not seized i should be able to sell those?

A.J. :

The civil penalty is likely not dischargeable, unfortunately. Although there are exceptions to every rule, very very rarely are fines or penalties owed a governmental unit dischargeable in bankruptcy. As for the vehicles, you could sell them once the bankruptcy proceeding was complete. During the course of the bankruptcy proceeding, the vehicles are still a part of the bankruptcy estate even if they cannot be seized because of an exemption. During a chapter 7 bankruptcy, the debtor (the person filing for bankruptcy) may not sell or dispose of assets, until the court has made a final decision. At that point, the debtor is free to dispose of assets that were protected in the bankruptcy.

A.J. :

So, in summary, based on the information provided, and using California's bankruptcy exemptions, the assets you list should be protected, and could be disposed of once the bankruptcy proceeding is complete. Unfortunately, a civil fine or penalty owed to a governmental unit is likely not dischargeable. It never hurts to sit down with a bankruptcy attorney in person to review your assets and debts, to make sure you are getting the most out of the process as possible, and I would strongly encourage this if at all possible. Should you need a referral to a bankruptcy attorney, the state bar association does have a referral service at:

A.J. :

http://www.calbar.ca.gov/Public/LawyerReferralServicesLRS.aspx

A.J. :

I hope this helps, and let me know if you have any additional questions or need clarification on anything I have said, I am happy to keep chatting. Otherwise, please remember to RATE my answer so that I can receive credit for my work.

Customer:

I guest system 2 is better for me, do i need to go bankruptcy in a hurry, before they get a judgment and do a lien o even if they do a lien i should be able to erase with the bankruptcy?

A.J. :

Although it is better to wipe out a debt before a suit is filed and a judgment is issued, a judgment debt is resolved in bankruptcy the same as any other debt. Generally my belief is that it is better to be done with as soon as possible, but even a judgment debt, so long as it is not a debt that would otherwise not be discharged (such as the civil penalty, a tax debt, a child support debt) can be discharged in bankruptcy just like any other debt.

A.J. :

I hope this helps further, and let me know if you need any additional information. Otherwise, please remember to RATE my answer so that I can receive credit for my work.

A.J.
A.J., Attorney
Category: Bankruptcy Law
Satisfied Customers: 4,300
Experience: Experienced consumer bankruptcy attorney.
Verified
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