A person filing a Chapter 7 bankruptcy in Utah can protect up to $2,500 equity in their motor vehicles.  In other words, if some one owns a vehicle with a value of up to $2,500, or the value of the vehicle is up to $2500 more than the amount owed, a person may retain their vehicle.  If a couple files a joint petition, then can protect up to $5,000 in one car.  If a person files a Chapter 13, then the results are different, depending on your income, your ability to repay your loan, and other variables. 

The value of the vehicle is one of two components that determine whether you can retain your vehicle in bankruptcy.  The value of the car is usually based on blue book value, but it may be some discounted value of purchase price.  If the value is low enough and can fit into Utah's personal property exemption, then the vehicle can be retained.  Likewise, if the difference between the value of the car and the amount owed is negative, or fits within the personal property exemption, then the car can be retained.  Naturally, if a debt is owed, either the vehicle must be turned back to the holder of the loan, or the debt associated with the vehicle must be reaffirmed.  One word of caution: if the debt is reaffirmed, it cannot be discharged.

The determination of debt is critical in determining how much, if any, equity exists in the vehicle.  If the debt owed is as much as, or more, the value of the vehicle, then there is no equity in the vehicle to claim under the $2,500 vehicle exemption.  If the loan on the vehicle is less than the value of the car, then the value of the car and the balance of the debt must be compared to determine if the equity in the car exceeds the auto exemption. 

Debts associated with vehicles can be reaffirmed and thus, vehicles can be retained.  However, the debtor must either catch up on deficiencies (if any) or renegotiate the loan with the holder of the note. 

It is possible.  Funds from family members or friends can be used to repurchase the vehicle from the trustee.