Automobile Exemption

In Oklahoma Bankruptcy Cases, the person are given an opportunity to protect certain assets through bankruptcy Exemptions. The most common exemptions are for your primary residence and your car.  There are several other bankruptcy exemptions available to persons filing bankruptcy in Oklahoma but for now this blog post will confine itself to the automobile expemtion in Oklahoma

The U.S. Bankruptcy Code provides a list of uniformed exemptions, however most states have the option of opting out and providing for its own exemption statutes.  Oklahoma is such a state, which opted out and provides Bankruptcy petitioners with its own exemption statutes.

One of the most frequently used exemption would be the Automobile exemption and under Oklahoma Statutes §31-1, an individual Debtors are able claim exemption on their automobiles in values up to $7,500.00 (equity value).

Therefore, if a Debtor is in possession of a vehicle with a fair market value (FMV) or an equity value (fair market value-lien against vehicle) below $7,500.00, such vehicle will be protected.

However, what happens in instances where the value of the vehicle is above the stated Oklahoma exemption limits or in the event Debtor owns more than one vehicle ?

In the instance of a vehicle with a  FMV of $15,000.00, which is owned free and clear by the Debtor, the Bankruptcy Trustee in Oklahoma may claim an interest over the $7,500.00 excess value over the initial $7,500.00 exemption value and force a sale of said vehicle.  On the other hand if the same vehicle had a lien of $5,000.00 held by a secured creditor the Bankruptcy trustee’s claim is limited to $2,500.00.

Although there is no guidelines or regulations setting forth the Bankruptcy Trustee’s threshold for claiming an interest over and above the exemption value in a Debtor’s vehicle, common sense would arrive at a conclusion that if it would cost more or equivalent to the value that the bankruptcy estate can claim against a vehicle to actually administrate a sale of such asset (not to mention time constraints and possibility that such asset will not sell for the anticipated value), more unlikely for the Trustee to claim an interest over such assets.

Accordingly, if a Debtor is in ownership of more than one vehicle, a careful decision would need to be made taking into consideration the value, lien status and conditions of such vehicles before deciding on which vehicle to claim an exemption in their bankruptcy filing.

If you would like a free consultation with a Bankruptcy lawyer in Tulsa, Oklahoma simply call or email one of our Tulsa Lawyers.