Cars and bankruptcy

The Bankruptcy Act allows you to keep cars/motor bikes up to a total value of $7700, for your personal transport.

However, there are a couple of points you should keep in mind:

  • The amount is ‘auction’ value, not the amount you see on similar vehicles advertised by motor dealers.
  • For a quick guide on the likely auction value of your vehicle, search your make and model under ‘Trade In Price Guide’ at www.redbook.com.au
  • if your car is subject to finance, it doesn’t matter if the car is worth more, it’s the equity that is relevant. For example, if the finance owing is $20,000, the car must be worth no more than $27,700 ($20,000 plus $7700).

If your car is subject to finance, you have two options:

  • If you want to keep it – and the finance company agrees – then you keep paying the loan and using the car, as long as there is no more than $7700 equity.
  • If you don’t want to keep the car, return it to the finance company. You won’t have to pay any loss on the sale, as it will be a liability in your bankruptcy.

Alan Nicholls’ no obligation help desk

Nicholls & Co provide a free, no obligation ‘help desk’ for people considering bankruptcy – we discuss and explain bankruptcy and answer questions for anyone who is considering bankruptcy. The Nicholls & Co help desk can be accessed by phone (1300 060 122) or helpdesk@nichollsco.com.au . Alan Nicholls, Registered Trustee in Bankruptcy is also available to answer your questions to enable you to decide if bankruptcy is right for you.