Bankruptcy clients who drive Harley-Davidsons are always very concerned about what will happen to their Harley in bankruptcy. Sometimes the fate of their motorcycle is the deciding factor in whether or not they will file bankruptcy. Keeping this kind of asset in a bankruptcy case depends on whether the case is filed under Chapter 7 or Chapter 13 and whether or not the asset is paid off.
In Chapter 7 bankruptcy, debtors list all of their assets, protect the assets with exemptions, and if there are any assets that cannot be protected a trustee may liquidate them and pay the proceeds to the creditors. Texas has very good assets and in most cases I am able to protect my client’s motorcycle. However, if the debtor is still making payments on this vehicle and they also have another vehicle, then the trustee may object to the expense as being unnecessary. The argument is that the debtor could use the money being spent on the motorcycle to pay his creditors.
In Chapter 13 bankruptcy, trustees don’t liquidate assets. Debtors provide for payment to their creditors through a repayment plan that lasts three to five years. If the motorcycle is the debtor’s only form of transportation, then keeping the bike is not an issue, assuming the monthly expense is reasonable. If the debtor has another vehicle as well then the bike is treated as a luxury expense and the trustee may object to any plan that doesn’t propose to pay 100 percent of the unsecured creditors listed in the plan. In Chapter 13 bankruptcy it isn’t whether or not the debtor can keep the vehicle but rather how much will it cost them to keep the bike? Sometimes the cost is simply too high and the debtor can’t afford to make the payment. For more information about keeping luxury items in a north Texas bankruptcy case call a Garland TX bankruptcy lawyer.