Yes, it is possible to keep a motorcycle (or boat, or some other non-traditional form of transportation). But there are a couple of different things you should keep in mind before your case is filed.
The easiest way to help you understand how your motorcycle will be affected is if we look at the two major chapters of bankruptcy side by side: in a St. Louis Chapter 7 bankruptcy, you have to make the court aware of all the personal property you own. This obviously would include any and all modes of transportation, like a motorcycle. The motorcycle you own is either going to be paid in full (in other words, no lien is attached to it), or you have a loan against it (in other words, you are financing the bike by way of monthly payments).
In either scenario (whether the motorcycle is paid in full or it has a loan against it), the real question is whether is any equity in the bike. Equity is the amount of value (that exists on paper) beyond what is currently owed. So for instance, if you owe $5,000 on the balance of your loan, and the fair market value of the bike is $7,000, that means that there is $2,000 in equity (7000 – 5000 = 2000). In addition, you are given a $3,000 exemption to cover any equity in a vehicle. In the above scenario, the motorcycle will be completely exempted, and you will still have one thousand left over.
But what if there is a significant amount of equity in your bike? Let’s change the above scenario a bit: if you owe $5,000, but the motorcycle is worth $10,000, now you have equity of $5,000. And then you apply your $3,000 exemption. Now you have $2,000 left over in equity. In this kind of situation, the Chapter 7 Trustee will most likely take an interest in bike, and perhaps even seek to liquidate the item. But even in this kind of situation, there are still opportunities to exempt the remaining $2,000 (the state of Missouri allows for various other exemptions, such as Head of Household, and Wildcard).
In a St. Louis Chapter 13 bankruptcy, things are a bit different. A loan against a motorcycle is paid off through the Chapter 13 plan (spread out over the course of three to five years). But if there is excessive equity, then you may have to guarantee that amount to your unsecured creditors (like credit cards, medical bills, payday loans, etc). So for instance, if there is $2,000 leftover in equity (beyond your exemptions), you will probably have to guarantee that $2,000 (again spread out over three to five years).
The affordable St. Louis bankruptcy lawyers at The Law Office of Jennifer Alter-Rieken have been making sure that each client’s personal property is protected for over ten (10) years. Our goal is to ensure that you are fully aware of your options, answer all of your questions, and put you in the best position possible moving forward. We have two locations: in the Central West End, at 1 North Taylor, St. Louis, MO 63108; and in the Twin Cities of Festus / Crystal City, at 1000 Truman Blvd (Highway 61/67). Our initial consultation is free of charge. Call today to learn more!