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How are motor vehicles dealt with in bankruptcy? P.2

In our previous post, we began looking at the topic of motor vehicles in bankruptcy, noting that the way motor vehicles are dealt with depends on the form of bankruptcy that has been filed. In Chapter 7 bankruptcy, the concern has to do with the value of motor vehicles to be exempted from liquidation.

Under Wisconsin bankruptcy law, Chapter 7 bankruptcy debtors are allowed to choose between a set of Wisconsin exemptions and the set of exemptions established by federal statutes. Wisconsin law, which is rather generous, allows debtors to exempt from liquidation up to $4,000 of the value of vehicles they own, plus any unused portion of the consumer goods exemption.

The consumer goods exemption applies to household goods and furnishings, wearing apparel, keepsakes, jewelry, appliances, books, musical instruments and various other categories of items. Chapter 7 debtors are allowed to exempt up to $12,000 of this amount. This means that a debtor can choose to give priority to a motor vehicle over certain consumer goods by transferring and adding their unused consumer goods exemption value to their motor vehicle exemption.

The federal bankruptcy code has its own rules regarding motor vehicle exemptions, and it is important for debtors to be aware of them and to compare them to the exemptions available under Wisconsin law. A Chapter 7 debtor who his concerned about retaining his or her vehicle in bankruptcy should, of course, work with an experienced bankruptcy law attorney to ensure they understand their options and make the best possible choices in the bankruptcy process.

Source: Wisconsin Statutes, Chapter 815

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