St. Louis Bankruptcy Lawyers Blog
Because determining the fair market value of an asset will show whether or not the asset has any equity. If the asset has equity (i.e. value above what is still owed on the loan), then there is a potential that you may have to surrender it in a St. Louis Chapter 7, or guarantee that amount in a St. Louis Chapter 13.
So for instance, let’s say you have a 2010 Honda Accord that is paid in full (i.e. no loan or lien against it). This type of car brings in a Kelly Bluebook value of around $20,000 (as of August 2011). The government provides an individual filing for a Missouri bankruptcy an exemption of $3,000 to cover any equity in a car. In this case, the amount of equity left over would be $17,000 ($20 – $3 = $17).
This is a great deal of equity, and any Chapter 7 Trustee would love to get their hands on the asset so that they could sell it, and use the proceeds to pay towards your unsecured creditors (like credit cards, medical bills, payday loans, etc.) Of course, it is a very rare situation in which an individual filing for bankruptcy owns such a newer car that is paid in full.
The more likely scenario would be this: You own a 2005 Nissan Pathfinder with a loan balance owed of $18,000. The bluebook value is around $15,000 (as of August 2011). This obviously would leave about $3,000 in equity. As mentioned earlier, you are given a $3,000 exemption to cover equity in a car. So in this case (at least on paper), there is no equity, and the Trustee will not be able to do anything with the car. ($18 – $15 = $3 / $3 – $3 = $0).
The St. Louis bankruptcy attorneys at The Bankruptcy Company have been practicing in the specialized area of bankruptcy for over ten years. Our goal is to make sure that you keep all the assets that you want, and to discharge all the debts that you don’t want. And of course, all phone calls and consultations are free of charge.