Can the wildcard exemption protect your car during bankruptcy?

 Posted on September 15, 2022 in Bankruptcy and Car Equity

If you are struggling to pay your bills, you certainly are not alone. In fact, according to Fox Business, half of American adults have had trouble paying credit card bills, medical debt, student loans or other outstanding balances during the past year.

Thankfully, Chapter 7 bankruptcy may give you a comparatively simple option for doing away with much of what you owe. If you take advantage of this type of bankruptcy, though, you must sell some of your assets to pay your creditors. This might mean getting rid of your car, truck or SUV.

Your need for reliable transportation

You obviously need access to reliable transportation for your commute to work and other places. Put differently, if you cannot drive, you may lose your job and incur even more debt. Regrettably, Maryland does not have a standalone automotive exemption in its bankruptcy laws. You may not be entirely out of luck, however.

Maryland's wildcard exemption

In Maryland, those who are seeking Chapter 7 protection can use the wildcard exemption to protect certain pieces of property from the bankruptcy process. Specifically, you can exempt up to $5,000 in cash or property plus an additional $6,000 in personal property. This means you may have $11,000 to put toward keeping your vehicle out of the hands of the bankruptcy trustee.

To know whether you are at risk of losing your vehicle, you must consider its value on the open market. Ultimately, if your car is worth $11,000 or less, you may not have to part with it.