E is for Equity


Equity. It is usually your friend. If you are in bankruptcy, it can be an issue. Simply put, equity is what you actually “own” in your property. For instance, if you have a car that is worth $10,000 and you still owe $6,000 on the loan, then you have $4,000 in equity. Same goes for your house. So how does this cause problems in bankruptcy?

Equity in Your Car

If you file for bankruptcy any non-exempt equity you have in your car is part of your bankruptcy estate. This means if you have a car wiht a lot of non-exempt equity you could have to give it up so that it can be sold and the money paid to your creditors. So what is “non-exempt” equity?

In Arizona there are laws that protect your stuff. They are called Exemptions. For example, in Arizona you have a $5,000 exemption for a car. This means that you can have up to $5,000 in equity in your car that is protected. So if you have a car that you own outright that is worth $5,000 or less, it is completely protected in your bankruptcy case.

Likewise, if you have a car that is worth $15,000 but you still owe $10,000, you can still keep the car in your bankruptcy because you only have $5,000 in equity – or $5,000 of the car that you actually own.

If you need to file a Chapter 7 bankruptcy, it is vital that we determine how much equity you have in all of your property and what Arizona exemption law applies. I can help you in evaluating your case and helping you move forward. My bankruptcy consultations are always free. I can be reached at (480) 420-4028 or via email at john@skibalaw.com.

Related posts:

1. Bankruptcy Exemptions – How to Protect Your Property During Bankruptcy (9.8)

2. D is for Debt Free! (9)

3. Do I Have to Live in Arizona to File Bankruptcy in Arizona? (7.1)

4. Bankruptcy in Retirement – Protecting Your 401(k), IRA, and Pension (6.1)

5. Can I File My Own Bankruptcy in Phoenix? Just Say No. (6)

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© John Skiba, Skiba Law Group, PLC | Attorney Advertising

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John Skiba
Skiba Law Group, PLC

Practice Areas: Bankruptcy, Chapters 7, 13 Fair Debt Collection Practices Act Litigation Consumer... View Profile »

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