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Can a Truck Be a Tool in Bankruptcy?


“Can I keep my truck?”

This kind of question is common when it comes to bankruptcy. For many people, the idea of losing a home, vehicle, or other important asset is enough to keep them from filing at all. That can only hold off the inevitable for so long for many, though.

Eventually, overwhelming debt can lead to a change of heart – and the need for a solution.

Thankfully, that solution does not always involve parting with vitally important assets. This is especially true when those assets are demonstrably important. This might involve a primary residence, a family’s only method of transportation, or a work-related tool.

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Which Assets are Protected Under Bankruptcy Law?

There are numerous ways that property and assets may be exempted from seizure during bankruptcy. Some of the most common exemptions are the homestead exemption – which protects a family’s primary residence from seizure – and the personal property exemption. The personal property exemption can often be used for things like vehicles, small valuables like jewelry, and other important items that a person may want to hang onto during the bankruptcy process.

Are Work Tools Protected from Seizure During Bankruptcy?

With all of these exemptions available for those filing bankruptcy, you might wonder if there are any protections for the things you use for work.

The simple answer is maybe. Depending on where you live, what type of work you do, how much you have invested in your tools, and how you use them, you may be able to exempt some of them from seizures. Unfortunately, that is not a very simple answer at all.

At the federal level, bankruptcy applicants may be able to exempt anywhere from $1,000-$2,000 worth of property or assets used for work-related purposes. This requires demonstration that these assets are used primarily for the purpose of making an income. However, each state has its own bankruptcy law, which can create confusion.

Florida, for example, does not allow for any specific amount of work-related assets to be protected from seizure through bankruptcy. This does not necessarily mean that no protections exist for those assets, but rather that those assets must be protected through some other exemption than the tools of the trade exemption.

All of this together leaves many business owners or independent contractors wondering what they can claim as a necessary tool for work – and whether it even matters. Are large assets ever considered tools? Can other exemptions protect these items? Can a truck be a tool in bankruptcy? The answers can be even more confusing than you might imagine.

Can a Truck Be a Tool in Bankruptcy?

When it comes to larger assets like vehicles, you generally have several options when it comes to bankruptcy. Not everyone needs to or chooses to keep their car during bankruptcy. For some people, allowing it to be seized or selling the vehicle may be worth more than trying to keep and protect it from seizure.

Some states allow you to exempt vehicles up to a certain value, either as a specific motor vehicle or transportation exemption or as personal property. In Florida, specifically, you may exempt up to $1,000 of value for a single person’s vehicle, or up to $2,000 for a married couple. A bill was recently brought before the Florida House that would increase this exemption to $5,000.

However, the rules of bankruptcy regarding vehicles and exemptions for them are sometimes different when that vehicle is arguably a tool for work. Again, specific to Florida bankruptcy law, there is no protection in place for trade tools. This includes vehicles of any kind. Regardless of how you use the vehicle or how much it is worth, you may not claim it as a trade tool during a Florida bankruptcy.

Thankfully, there are some other exemptions that we have already covered that may be applied to your work vehicle. Your attorney may be able to identify still more that apply to your specific situation.

Playing the Wildcard 

Have you ever heard of the wildcard exemption? This might sound like something out of a card game, but it is actually a generous and useful exemption in Florida bankruptcy law.

In some states, exemptions exist that allow you to choose a specific asset or assets up to a combined amount reaching a specific total. Those assets are then exempt from seizure in your bankruptcy. Florida is one state where this exemption exists, with a total of up to $4,000. It is important to note that this exemption is only available if a person or family does not claim the homestead exemption.

While there are some other specific rules and regulations regarding how and for what this exemption can be used, it can really come in handy when you are trying not to lose important property, assets, or tools. If your truck is likely worth around $4,000 or less – and you cannot otherwise exempt it from seizure – you may be eligible for this exemption.

Concerned About Navigating Bankruptcy Law? 

Bankruptcy is always a stressful time for those experiencing it. Adding in the concerns of navigating bankruptcy while both maintaining your livelihood and protecting your work vehicle from repossession can make things even more difficult.

Your best bet with a work-related asset like a vehicle is to speak to a bankruptcy attorney to determine how to apply various exemptions to your benefit.

Van Horn Law Group


This article originally appeared here and was republished with permission.