What Happens to a Classic Car During Bankruptcy?

When individuals find themselves in financial distress, they often turn to bankruptcy as a form of relief. However, bankruptcy isn’t as straightforward as it might initially seem, especially when assets like classic cars are involved. Let’s examine what happens to a classic car during a bankruptcy case.

Bankruptcy is a legal proceeding where individuals or businesses who can’t repay their debts to creditors may seek relief from some or all of their debts. In the United States, bankruptcy cases are handled in federal courts, following the rules outlined in the U.S. Bankruptcy Code.

Classic cars can be considered valuable assets, which complicates bankruptcy filings. The fate of your classic car in a bankruptcy case largely depends on two factors: the type of bankruptcy you’re filing (Chapter 7 or Chapter 13) and the value of the car.

Chapter 7 bankruptcy, also known as liquidation bankruptcy, involves the sale of a debtor’s non-exempt assets by a trustee. If you file for Chapter 7 bankruptcy and your classic car is considered non-exempt, you may lose it. However, each state has exemption laws that allow you to protect a certain amount of property. If the value of your classic car is less than your state’s vehicle exemption, you may be able to keep it.

Chapter 13 bankruptcy, on the other hand, allows debtors to keep all of their property but requires them to pay back their debts over a 3- to 5-year period. If you file for Chapter 13 bankruptcy, you’ll likely be able to keep your classic car, but the value of the vehicle may increase your repayment plan amount.

It’s important to note that the value of a classic car can be subjective and may fluctuate based on factors like its condition, rarity, and the market demand. This can make it difficult to accurately assess its worth during a bankruptcy case. Therefore, it’s essential to get a professional appraisal of your classic car if you’re considering filing for bankruptcy.

Bankruptcy laws and regulations can be complex and confusing, especially when valuable assets like classic cars are involved. It’s advised to seek legal counsel to navigate this difficult process. Liviakis Law Firm is available to assist you with your bankruptcy needs. Contact a knowledgeable bankruptcy lawyer for a free consultation.