If you’ve filed for a Chapter 7 and your car gets totaledfor whichyou receive money from your insurer, mustI give it tomy Trustee?

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If you’ve filed for a Chapter 7 and your car gets totaledfor whichyou receive money from your insurer, mustI give it tomy Trustee?

I had a car that was paid off. I filed for Chapter 7 then got in a wreck and it was totaled. I recieved money and need to buy another car. Can I do that or does all of the money I got paid have to go to the trustee?

Asked on November 4, 2010 under Bankruptcy Law, Florida

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

The best person to ask this of is your trustee as you have an obligation to disclose any funds received in a payout. Itcould be considered as money available to creditors. Your entitlement to the car would only have been up to a certain amount under your exemptions as indicated in the law in your state.  If the car was worth 10 times the exemption it could have - presumably - been sold to pay off your debt.  So you need to advise the trustee and ask to set aside a certain amount of money to purchase a used car perhaps or as a down payment on a new car (but then you have the bankruptcy issue with the loan). Get some advise in your area.  Good luck.  


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