How to Determine the Value of a Car in Bankruptcy Proceedings

By Heather Frances J.D.

Bankruptcy allows debtors to get a fresh financial start by having many of their debts erased, or discharged, when the debtor successfully completes the bankruptcy process. Generally, a debtor must list his assets and their value, including the value of vehicles he owns. Court-appointed trustees typically want a reasonable, reliable valuation method rather than guesswork or a debtor's own estimate.

Book Value

Bankruptcy filers must provide a reasonable estimate of what the value of the car would be worth if they sold the car, so the amount remaining on the car's loan is not necessarily an accurate measure of value for bankruptcy purposes. Debtors can use a National Automobile Dealers Association guide or a Kelley Blue Book guide to obtain for the vehicle, since these values are widely accepted by car dealers. To obtain this value for a particular vehicle, debtors can look up value in a hard copy, which is available at many libraries, or by looking online.

Purchase Offers

Debtors can also determine value by obtaining a purchase offer from a used-car retailer. Since these companies buy vehicles intending to resell them, the value proposed by the company is frequently lower than blue book values. A lower value often benefits the debtor using the value for bankruptcy purposes, so this can be the most advantageous way to determine a vehicle's value.

Get a free, confidential bankruptcy evaluation. Learn More
Get a free, confidential bankruptcy evaluation. Learn More
How to Declare Bankruptcy in Illinois
 

References

Related articles

Pros & Cons of Filing Bankruptcy

Individual debtors frequently file for bankruptcy under Chapter 7 or Chapter 13 of the Bankruptcy Code, and either course can provide more pros than cons for certain debtors. To file under Chapter 7, you must meet certain income qualifications, but under Chapter 13, you must follow a repayment plan over three to five years. At the end of either type of bankruptcy, you may receive a discharge, or elimination, of certain remaining unpaid debts.

How to See If a Bankruptcy Has Been Discharged

When a person applies for a new loan or refinancing after bankruptcy, it is common for some lenders to want proof of discharge. This can easily be established with bankruptcy records. You may obtain a copy from the bankruptcy court, the attorney in the case, or online.

Do I Need Permission From the Bankruptcy Trustee to Finance a Vehicle?

Buying a car isn't easy once you have filed for bankruptcy. If you need to finance a car before your bankruptcy is discharged, it can be even more difficult. If you filed Chapter 13 bankruptcy, you must get permission from the bankruptcy trustee to finance a car. If you filed Chapter 7 bankruptcy, you don't need permission from a trustee, but obtaining financing may be difficult.

Bankruptcy

Related articles

How to Redeem Real Property in Chapter 7

If you want to redeem real estate -- that is, gain ownership of it following a bankruptcy proceeding -- you need to pay ...

Can the Court Take My Savings in Bankruptcy?

Personal bankruptcy is a legal process that allows individuals who have become overwhelmed with debt to get a fresh ...

Can You Keep Vehicles & Boats in a Bankruptcy?

If you file for Chapter 7 bankruptcy, your property may be seized to pay your debts, including any cars or boats you ...

What Is a Bankruptcy Appraisal?

A bankruptcy appraisal is a complete financial picture of your income, debts and financial obligations. It is used to ...

Browse by category
Ready to Begin? GET STARTED