The Bankruptcy Act provides that you can keep cars/motor bikes up to an auction value of $7,500 combined for you to have transport.
A couple of quick points:
- The amount mentioned above is ‘auction’ value and not the amount that you see similar vehicles advertised by motor dealers.
- A quick guide on the likely auction value of your car can be obtained by going to www.redbook.com.au, and search your car for the ‘Trade In Price Guide’. This amount is normally in line with auction value
- If your car is subject to finance it does not matter that the car is worth more than $7,500, it is the equity in the car that is relevant. For example, if the finance owing on the car is $20,000 then the car would have to be worth no more than $27,500 ($20,000 plus $7,500)
- If your car is subject to finance you have a couple of options:
- If you wish to keep the car, with the consent of the financier, you can keep paying the loan repayments and retain the use of the car if it displays no more than $7,500 equity
- If you do not wish to keep the car you can return it to the financier and you will not have to pay any loss suffered on the sale of the car as same will be a liability in the bankruptcy.