Understanding Car Titles in Bankruptcy

Thank you for checking out my blog post that focuses on issues with car titles and bankruptcy. In this YouTube video, Hailey, a reader of Bankruptcy.Blog, wanted to know what issues exist, if any, because she was added to the title of her boyfriend’s SUV. Hailey would be filing for Chapter 7 bankruptcy in Georgia.

This is a common and routinely done to avoid issues with probate. For example, by adding your partner to your vehicle’s title, should you pass away, the vehicle would automatically transfer to your partner. Considering the costs of hiring a lawyer to handle this in probate court, it’s a smart move from a practical sense. However, it complicates issues when it comes to bankruptcy.

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In this case, the first step is determining the value of the vehicle and Georgia’s motor vehicle exemptions for bankruptcy to avoid putting Hailey and her boyfriend at risk of losing the vehicle. In Georgia, the motor vehicle exemption is $5,000. That is the magical number to determine to what extent if any, Hailey is protected.

I prefer to use the word protections instead of exemptions as it makes it easier to understand how they work. Now, apply the protections in this case, just figure out the value of the vehicle. Say $40,000 and subtract the exemption of $5,000. That leaves $35,000 not protected. That is the interest the bankruptcy estate has in the vehicle, so to protect their car, they would need to consider Chapter 13 bankruptcy and pay that amount at the minimum over a 36 to 60-month period.

If you have questions regarding the bankruptcy exemptions and how they apply to vehicles, please feel free to send me an e-mail. Your question is chosen, and it will be posted in the Reader’s Question forum.

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