How to Keep My Motorcycle in a Bankruptcy

The purpose of bankruptcy is to put debtors on fresh financial footing. A person will not necessarily lose their house, their car or their motorcycle if they file for bankruptcy. The bankruptcy laws allow debtors to take exemptions. If an asset is exempted, it is not used to compute the bankruptcy estate and is essentially protected from the proceedings. If exemptions are not available for the motorcycle, and if the debtor can afford to pay something for it, the debtor may be able to negotiate a payment play to keep the bike.

Contact the bankruptcy court in your area and ask the clerk for the most current exemption amounts. In 2010, the federal exemption amount for vehicles was $3,450. Note that your state may have a different exemption amount and you can choose between which exemption (state or federal) you want to take.

Appraise the motorcycle’s value. Exemptions are based on the current value of the property. Look up the motorcycle’s value in a vehicle appraisal guide such as the Kelley Blue Book.

Compare the exemption amount against the value of the motorcycle. If you own the motorcycle outright (meaning you are not paying a loan on it), and the motorcycle is worth as much or less than the exemption amount allowed, take the exemption by filling out Bankruptcy Form Schedule C.

Negotiate a payment plan with the lender to allow you to keep the motorcycle. If you cannot take an exemption or if you still owe on the bike, you can try to negotiate a new payment plan with the creditor to allow you to keep the bike. Fill out a Reaffirmation Agreement form and file it with your bankruptcy papers.