When I file bankruptcy, can I exempt my car from the creditors and does that mean I get to keep the car?
First, when trying to decide which exemptions you should use (federal or Massachusetts) it is an excellent idea to talk to your bankruptcy attorney, because which set of exemptions you choose will depend on your unique situation. When you 'exempt' your car, you are really only exempting any equity you have in it. So, if you have a car that is worth $10,000 and you still owe $9,000 to the finance company, you can exempt that $1,000 in equity. Of course, you can only keep the car if you continue to make the payments. (You would have to reaffirm the debt and sign a new contract given to you by the lender.)
Naturally, if you owed more than the car was worth, you would not want to reaffirm the dept and continue making payments. Instead, you would seek to have the debt discharged and return the car to the lender. Good luck, and please tell your friends about The Forum. Follow this link for a more complete discussion of Massachusetts Bankruptcy Exemptions.