Bankruptcy Urban Myth #1 I can keep my car, right?
I can keep my car in bankruptcy, right? Most people think that they get to keep a car in bankruptcy. It makes sense, right. You need a car to get to work to pay the bills, including your credit cards and other monthly expenses. If you do not have a car, you cannot get to work and will be unable to pay those bills. So, therefore, I am entitled to a car. Well not exactly.
Let's say you have a Porsche or Rolls Royce, would someone be allowed to keep that car in bankruptcy. No, you don't get to keep those cars and no that person would not be in bankruptcy in the first place.
But, the point is that you do not get to keep a car. What you get to keep in bankruptcy, at least in Florida, is an interest in the equity of a car. Equity is the difference between what the value of the auto is and the amount of debt you owe on it. For instance, if your car is worth 10,000 dollars and you owed 11,000 dollars, you do not have any equity, whereas, if you only owed 8,000.00 you would have 2,000.00 in equity. An individual using Florida bankruptcy exemptions is allowed a 1,000 in equity in a single vehicle. As most people have little equity in a vehicle, they can keep their car in bankruptcy. But for those who have more than 1,000.00 in equity, beware. Just because you need the vehicle to get to work or take your mom to her doctor's appointments, they is no right to keep a car.
Next urban myth: I do not have to include property in my bankruptcy if it was given to me. Florida Statute 222.25(1)