What happens to your car if you go bankrupt?


1 – You own the car and do not have any secured loan against the title of the vehicle.

If you are the owner of the car and have no loan against it, the value of you car can not exceed $8,150.00. You can have more than one vehicle as long as the total is less than this threshold.

Also you need to know that the value is not car yard (retail value), but wholesale value. What this means for you is that most people who have a $10,000.00 car will find that for bankruptcy purposes your car is under the limit and you will be able to keep it.

If your car is still valued at more than the threshold and the trustee wants to sell it the trustee has to give you $8,150.00 so you can buy a car.

2 – If you own the car with your partner or somebody else the threshold doubles to $16,300.00. This is whether or not they are going to declare bankruptcy.

3 – Your car is used as security for a loan.

 If your car is leased or is collateral for a loan the value of the car now does not matter as long as you can afford to (and want to) continue your loan repayments and your equity in the car is not more than $8,150.00.

The one thing that is important is that your car doesn’t becomes an asset if your loan is finalised prior to the completion of your bankruptcy term. So that means that you finish paying off the car during the 3 years of your bankruptcy and it is then valued at more than the $8,100.00 threshold.


What happens to your income in bankruptcy?

Many people think and are told that if you go bankrupt you will lose part of your income. For most people who go bankrupt, this is not true. There is a protected amount, which is always yours to keep. Currently this amount is $1,188.00 after tax per week for a person with no dependants. 

The more dependants you have the higher the protected amount. 

Here are the protected amounts. They are all after tax.

These amounts are up to date until September 2022


  • Dependants     Weekly
  • 0                          $1,188
  • 1                          $1,402
  • 2                          $1,509
  • 3                          $1,568
  • 4                          $1,592
  • over 4                $1,616

If you need to go bankrupt and you are worried about income, call us and we will explain how it will affect you. Most people are surprised at how generous the protected amounts are.


What happens to your home in Bankruptcy

If you are buying your home and have a mortgage the equity in your home will vest with your Trustee. Depending on circumstances there may be options to get that equity back and in turn keep your home. You really need to seek proper advice before going bankrupt. Call us today and we will explain how it is likely to work based on your circumstances.

If you own your home with no mortgage and you go bankrupt your home will vest with your Trustee. This means that the Trustee will sell the home so that your creditors can be paid.

If you are renting your home and want to continue renting it bankruptcy will not affect your situation.


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