The Bankruptcy Act allows you to keep cars/motor bikes up to a total value of $7800, 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 $27,800 ($20,000 plus $7800).
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 $7800 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.