Orlando Bankruptcy Courts To Take Tougher Stand On Automobile Valuation

I have heard from several sources that  Orlando Division bankruptcy courts are getting tough on car valuation in Chapter 7 bankruptcy. I have written previous blog posts about bankruptcy clients who successfully used valuation sheets from CarMax as evidence of their non-exempt car’s valuation prior to filing. Bankruptcy debtors found that the CarMax appraisals were lower than NADA or Blue Book valuations during the economic crises and gas crises when car valuations dropped precipitously. During the past year most Chapter 7 trustees accepted CarMax appraisals because on the theory that CarMax appraisals constituted purchase offers and were true indicators of what an arms-length buyer is willing to pay in the current market. Also, trustees found they could not get NADA values when they auctioned a debtor’s vehicle and that the CarMax valuations were a reasonable statement of market value. The policy is changing and become stricter.

The Orlando Division bankruptcy judges recently reaffirmed that the value of debtor’s automobiles for purposes of the vehicle exemption or buy-back from the trustee is the average of the trade in value and the retail sales values. The judges believe that CarMax and other similar national automobile companies have been quoting trade in values not fair market values or purchase offers. The  judges asserted  that trustees are supposed to arrive at market value of automobiles by averaging trade in value and full retail value. This stricter approach to car valuation will effectively reduce Chapter 7 debtors ability to exempt cars in bankruptcy and increase the debtor’s costs of buying back non-exempt car equity from the bankruptcy trustee. Chapter 7 bankruptcy will be more difficult for many debtors in the Orlando Division. 

posted by Jonathan Alper, bankruptcy and asset protection lawyer, Orlando, Florida