Are you going to have to take the bus after your bankruptcy?

On Behalf of | Sep 12, 2022 | Bankruptcy |

Largely due to record-high inflation, Americans are more in debt now than they ever have been. Indeed, according to LendingTree, U.S. consumers have racked up nearly $900 billion in credit card debt. This figure does not include the billions of dollars Americans have in unpaid medical bills and student loans.

If you have fallen behind on your monthly payments, your quality of life also has probably declined. After all, having unpayable debt can take an extreme toll on anyone’s mental health. If you are thinking of resolving the issue by filing for bankruptcy protection, you may wonder if you are going to lose your car.

Chapter 7 bankruptcy

With Chapter 7 bankruptcy, you typically must sell some of your assets to pay your credits. Whatever debt remains, the bankruptcy court discharges. This means you are no longer on the hook to pay for it. If your assets fall within a bankruptcy exemption, though, you do not have to part with them.

A vehicle exemption

Like in other states, North Carolina’s Chapter 7 bankruptcy rules have a vehicle exemption. Provided you meet certain requirements, you do not have to worry about having to take the bus after filing for bankruptcy.

To qualify for the vehicle exemption, you either must own your vehicle outright or be current on payments and willing to continue to make them. Furthermore, your vehicle must not be worth more than $3,500. Nevertheless, if your car has a greater value, you may be able to use the wildcard exemption to keep it out of the hands of the bankruptcy trustee.

As you can see, bankruptcy exemptions are technical and can be difficult to grasp. Ultimately, to ensure you can keep your car after filing for bankruptcy, it is advisable to seek a full explanation of all your legal options.