In Oklahoma Bankruptcy Cases, you’re given an opportunity to protect certain assets by using bankruptcy exemptions. The most common exemptions are used for your home and your car. There’s several other bankruptcy exemptions available to people filing bankruptcy in Oklahoma. But for now this blog post will confine itself to the automobile exemption in Oklahoma
You Don’t Lose Your Car, Its The Bankruptcy Law:
The U.S. Bankruptcy Code provides a list of uniformed exemptions. However most states have the option of opting out and providing for its own exemption statutes. Oklahoma is such a state, which opted out and provides Bankruptcy petitioners with its own exemption statutes. One of the most frequently used exemption would be the Automobile exemption. Under Oklahoma Statutes §31-1, an individual Debtors are able claim exemption on their automobiles in values up to $7,500.00. This is equity value. Therefore, if a Debtor is in possession of a vehicle with a fair market value (FMV) or an equity value (fair market value-lien against vehicle) below $7,500.00, such vehicle will be protected.
It’s Okay if You Owe Money on Your Car:
If you’re filing a chapter 7 bankruptcy and you own a car you have some things to think about. In the instance of a vehicle with a FMV of $15,000.00, which is owned free and clear by the Debtor, the Bankruptcy Trustee in Oklahoma may claim an interest over the $7,500.00 excess value over the initial $7,500.00 exemption value and force a sale of said vehicle. On the other hand if the same vehicle had a lien of $5,000.00 held by a secured creditor, the Bankruptcy trustee’s claim can only be $2,500.00.
There are no guidelines or regulations setting forth the Bankruptcy Trustee’s threshold for claiming an interest over and above the exemption value in a Debtor’s vehicle. Thus, if it would cost more than the value that the bankruptcy estate can claim against a vehicle to actually administrate a sale of such asset, more unlikely for the Trustee to claim an interest over such assets.
Accordingly, if a Debtor is in ownership of more than one vehicle, a careful decision would need occur. Take into consideration the value, lien status and conditions of vehicles before deciding which to claim on exemption. If you claim the exemption on the car without a lien and reaffirm the loan and continuing paying on the vehicle you owe money on that’s also a good solution.