Chapter 7 and Motor Vehicle Exemptions

If you’re considering filing for Chapter 7 bankruptcy, you may be concerned about what could happen to your car and whether you will keep it during or after bankruptcy. Fortunately, Illinois law provides a motor vehicle exemption which will allow you to protect up to $2,400 in car equity.Of course, if your car’s entire equity is less than Illinois’s motor vehicle exemption, the trustee will be unable to sell it. But if its equity is more than the exemption, it may be sold in order to repay unsecured creditors, and repossession after bankruptcy may also be possible. If you fear the possibility of losing your car during bankruptcy, however, Illinois also offers a “wildcard exemption” of up to $4,000. This means that up to $4,000 of your personal property (except for wages) may be claimed as exempt during Chapter 7. For example, if your vehicle has $6,000 in equity, you may apply $2,400 from the motor vehicle exemption and $3,600 from the wildcard exemption, provided that you do not use more than the remaining $400 on other property.If you and your spouse file for joint bankruptcy, you are each entitled to $2,400 in motor vehicle exemptions for one motor vehicle. For example, you may use $4,800 total (both your exemptions) to protect one vehicle you own together, but cannot use $4,800 total to protect a vehicle solely owned by you or your spouse.If you’re struggling financially, remember that you have options. Contact an experienced bankruptcy attorney today for a free consultation.