Can my child keep their car when I file bankruptcy?
One thing that many people think about when they are contemplating bankruptcy is what effect it will have on vehicles that their children may co-own or that the parent has registered on behalf of the child. Co-signing a vehicle on behalf of our children can be done for a variety of reasons. A child may be underage when a vehicle purchase is made, and therefore unable to register the vehicle in their name. A parent can also co-sign a vehicle on behalf of an adult child to help with the financing. The parent will own the vehicle because Minnesota law states that the title is the proof of ownership. If a parent has an interest in a child’s car, they may wonder if bankruptcy will affect it, how much, and if the bankruptcy process can be modified to accommodate it. This does not mean the child will lose their vehicle. If the parent’s equity in the vehicle is protected by the bankruptcy exemptions, then there should be no problem with their child keeping the vehicle! If there is a small amount that cannot be protected, you can still pay the bankruptcy trustee what you can to protect the equity. Your child can still keep the vehicle.
Inversely, if your child is titled to a vehicle and you are in a Chapter 13 Plan, the equity will be protected by the payments made into the Chapter 13 plan! If you are making payments on a car loan, your child can continue to make payments directly to the lender. Your bankruptcy attorney will give you advice on how to structure your Chapter 13 to protect the vehicle of your child.
In Minnesota the title of a vehicle is usually determinative of ownership. This means that if your name appears on the title for a car owned by your child, then you are also a co-owner. However, this does not mean that the vehicle cannot be protected as you navigate the bankruptcy process however; our firm are experts in analyzing the ways in which a vehicle can be protected and preserved through bankruptcy, and we would love the opportunity to speak with you about it.
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