If I own a car free and clear but file for Chapter 7 Bankruptcy, can they take my car?

You have exempt property value that you can claim. One of those exemptions is $1000 of equity in the car. You get $1000 general exempt on personal property. If you do not own a home or claim homestead you will also receive an additional $4,000 of exempt property. You can apply these exemptions to property of your choice. If your car is only worth $2,500, you should be able to use your exemptions to claim most of the value of the car. Normally a trustee will not take a car for resale if it will not net after sale costs $1,000.

If you have been a Florida resident for 2 years, you would use Florida exemptions. You can exempt $1,000 in value against a car and if you do not receive the benefit of a homestead exemption, and additional $4,0000 in exemptions is permitted. You have an additional $1,000 that can be used to protect personal property(including furniture) Some trustees will accept short term payment plans, others do not. This is often a problem in chapter 7s.

Yes, the Bankruptcy Court can take your car. Otherwise you could keep your fully paid for Rolls Royce and your creditors would not get anything so you can keep your luxury car. You are allowed an exemption of $1,000 for a motor vehicle. If you file a joint bankruptcy with your spouse and the car is titled jointly, you can each apply a $1,000 exemption to the car for a total of $2,000. In Florida if you do not own real estate there is also a super exemption of $4,000 that you could apply to the car ($8,000 for a husband and wife). If you cannot cover the entire value of the car with the allowable exemptions, you can either pay the bankruptcy court the value that was not covered by exemptions with funds acquired after the bankruptcy was filed or you can surrender the car to the Bankruptcy Court. The Trustee will then sell the car, pay you the amount of allowable exemptions and use the rest of the proceeds to pay creditors. The bankruptcy law doesn't really care whether you can come up with the funds to pay the court if the car is worth more than you can claim as exempt property. The lawmakers who created the law determined how much you can keep. In Florida they determined that $1000 equity in a car was as much as a person declaring bankruptcy is entitled to keep. Most people who file for bankruptcy protection have loans against their cars or lease their cars. As a result they have no equity in a car and have to pay off their car loan to keep the car.

You can claim up to $1000 of equity in a single motor vehicle. If you do not own a home, you can claim up to $4000 of personal property as exempt. So, you may not have to come up with that much and the trustee may not be interested anyway.