Good News For Used Car Dealers May Not Be Good For Chapter 7 Debtors

I buy all my cars from a guy named "Mo" in Longwood, Florida, at his business called Auto Gallery. I’ve purchased several used cars from Mo during the past 15 years. Last week I asked Mo how his used car business was doing, expecting to hear the type of complaint currently expressed by most businessmen that business is way down and that  they are struggling to survive. Instead, Mo told me, with a big smile, that his used car business is booming! He said it has never been easier to sell his cars and that large dealers are willing to pay extremely high prices for his cars; Mo can’t keep cars on the lot. I thought Mo might be doing something illegal if he was making so much money in today’s economy, but his joy about his used car sales was later confirmed by a USA Today article that said used car prices are soaring because people are buying used cars instead of new cars. This is good news for Mo, but its not good news for people who file Chapter 7 bankruptcy.

Florida bankruptcy debtors are limited to $1,000 car equity in Chapter 7. People who don’t own a homestead get additional exemptions. Last fall, as the credit dried up and the economy declined, car values declined. Chapter 7 trustees at that time were relatively less interested in pursuing debtor’s cars because the used cars were depreciating assets. Now, with the strong recovery of the used car market, more and more debtors will find that their used cars exceed the applicable car exemptions. Chapter 7 trustees are likely to be more aggressive challenging debtors’ low car valuations, and the trustees will be more aggressive pursuing debtors’ used cars. I usually suggest debtors appraise their car at large dealers such as Carmax or AutoNation as these offers are a reasonable estimate of what a bankruptcy trustee could realize from a car auction.

Comments

[castors]

Well your friend there must be really lucky. This post is really informative. I'll keep visiting for more of your updates.