How much is my car worth? This a question asked by most bankruptcy debtor’s who plan to file Chapter 7 bankruptcy and own a car free and clear of any liens. Florida law exempts only $1,000 of car equity in most cases, and cars’ liquidity makes them a prime target of Chapter 7 trustees who seek to recover non-exempt assets for creditors.My own clients have suggested many methods they intend to use to value their own non-exempt cars. Example valuation standards are: written appraisals from their personal used car “guy”; an average of the car’s wholesale and retail values; the bid they get at Carmax, the Blue Book etc. This past Tuesday I was at a creditors meeting and I asked a bankruptcy trustee how she, and other trustees she speaks with, determine the value of debtor’s automobiles. She said that most trustees she has spoken with use the “trade-in” or in the yellow NADA book. That’s the book the banks use for car lending. She said that some trustees use “loan value” which is close to the “trade in” value. Carmax provides the lowest valuation based on auction wholesale price. If you plan to take a car through bankruptcy make sure you are “on the same page” and in the same value book as your bankruptcy trustees.
Secondly, if there is something wrong with your car you need to adjust the car value and tell the trustee at the creditors meeting. One of my recent clients told me his car was worth $4,000 based on NADA value. The trustee made him buy back $3,000. After the creditor meeting the client told me that, “oh, by the way” the car air conditioner had been broken for some time and required a $2,000 repair. That fact, if known before the trustee meeting, probably would have removed the car as an issue. Now, the client is facing a difficult task of explaining why he believes his car is worth $2,000 when he swore on his bankruptcy petition it was worth $4,000.
Your bankruptcy attorney is not going to perform a mechanical inspection of your car and is not an expert on car values. Anything that could lower your car’s value must be considered before you sign your bankruptcy petition.
I always try to list any defects to an automobile (especially non-working AC) in the schedules themselves. I want the trustee to know the true condition of the vehicle before the 341 meeting. I also don’t want to take a chance that the Debtor, or myself, will forget to mention the defect at the 341 meeting.
I like the approach you took with this topic. It is not every day that you find a subject so to the point and enlightening.
Ontario Bankruptcy
I have a few trustees that value it high, using the KBB private party value – this can be thousands from the trade-in/retail price….so it is definitely wise to get a feel for the trustees you see commonly.
I agree with your second thought “if there is something wrong with your car you need to adjust the car value and tell the trustee at the creditors meeting.”
Thanks for the useful information!
bankruptcy make sure you are “on the same page” and in the same value book as your bankruptcy trustees.
Chapter 7….Can a married couple keep 3 cars if all 3 are being financed and the debt is reaffirmed?