Bankruptcy FAQ: How Does the Utah Car Exemption Work?

Cars on roadMany people who have difficulty keeping up with bills and are deep in debt often consider filing a Chapter 7 bankruptcy case. A Chapter 7 bankruptcy will discharge most types of unsecured debt, but the debtor’s property becomes the property of the bankruptcy estate.

A trustee is given the authority to sell those assets so that one can pay the creditors. There are exemptions, of course – there are some types of property you can keep so you can get a fresh start.

It’s best to consult a Chapter 7 attorney here in Salt Lake City in this regard because while some states allow debtors to choose between using a list of federal bankruptcy exemptions and state exemptions, in Utah you are not given this choice – you must abide by the state’s bankruptcy exemptions.

Let’s discuss one kind of property you can keep if you file for bankruptcy: your car.

Utah’s Motor Vehicle Exemption

One of the “exempt” properties in a Chapter 7 bankruptcy are motor vehicles. In Utah, you are entitled to protect up to $5,000 of equity in a car, van, SUV, motorcycle, truck, or other motor vehicles – assuming, of course, that you have clear ownership and that the vehicle payments are current.

If you’re months behind a car loan, for example, you are not allowed to keep your vehicle even if the equity is exempt. If you want to keep your car, you need to come up with a plan to bring your payments up to date before filing for bankruptcy.

In Utah’s motor vehicle exemption, if the equity in your vehicle is less than $5,000, the trustee cannot sell it. If it is significantly more than $5,000, your car is likely to be sold to repay unsecured creditors. However, do note that even if your vehicle has protection, the lender may be able to repossess it during or after bankruptcy. If you are married, you and your spouse can file a joint bankruptcy petition to double the exemption and protect up to $5,000 in equity.


Utah’s motor vehicle exemption comes with a few restrictions. The first is that it can only be used to protect one vehicle. Second, the exemption cannot be used to protect vehicles that are used primarily for recreational purposes.

Only vehicles used for daily transportation (like a car you use to drive to work) may have coverage under the exemption. Off-highway vehicles (motorcycles, all-terrain vehicles, snowmobiles) and recreational vehicles (vans, motor homes, trailers) have no coverage unless one uses these for day-to-day transport.

To learn more about Utah’s bankruptcy exemption laws, you check out the official website or consult a bankruptcy lawyer for your particular situation.