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TAS Car in Bankruptcy - How Will it be Treated?

Discussion in 'Debt and Bankruptcy Law Forum' started by alex7140, 5 November 2014.

  1. alex7140

    alex7140 Member

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    Hello I have a car in bankruptcy which was financed by a personal bank loan.
    My trustee has asked me to show proof the personal loan was for a car(which I have done) and now I'm being asked to get a valuation of the car done.
    My confusion comes with not knowing whether or not the trustee is asking me to do this to sell the car or to work out the equity in asset.
    The cars red book value is around $20000 and the personal loan still had greater amount owing than this.
    Does the trustee calculate equity or will this just be treated as a $20000 asset to be sold.?
     
  2. Tim W

    Tim W Lawyer

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    The car loan might be secured by a charge over the car,
    in which case, the loan provider is a secured creditor.
    Your trustee may be wanting to work out both the priority of creditors
    and the potential market value of the car.

    If the car loan is unsecured, then it may simply be a question of
    working what a reasonable price might be if it is sold to help meet your debts.

    The market value of the car vs equity vs the debt
    may also be a factor in a claim on any loan insurance.

    Don't make anything of Red Book "value".
    Like any object, a car does not have an objective value.
    It's only "worth" what somebody is prepared to pay for it.
    Unless you are in the motor trade and have the particular skill of "netting"
    (that is, working out the likely wholesale value of) a car,
    the Red Book means nothing to you.

    Your best bet is up and ask your Trustee any questions you have.
    Bear in mind that as a bankrupt, you don't have very much say
    in any of what happens.
     
  3. Sarah J

    Sarah J Well-Known Member

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    Hi Alex,

    I agree with Tim. The trustee in bankruptcy needs to first ascertain if there are any creditors with priority claim over the car. In any case, the most likely outcome will be that the car will be sold and the proceeds be distributed to the rightful creditors. As a bankrupt, most of your "assets" now belong to the trustee in bankruptcy to be sold and converted into proceeds of sale to be distributed amongst creditors. The valuation is important as it is part of the process and calculations. However, as Tim said, the real "value" of the car is whatever the purchaser is willing to give for it provided that the trustee makes a proper sale.
     

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