Many people are currently drowning in debt but are unable to obtain a fresh start in bankruptcy because their seven-year-old vehicle suddenly has $10,000.00 in equity which would cause them to lose their vehicle in a chapter 7 bankruptcy.
Vehicles typically depreciate around the same rate as vehicle payments are made. However, chip shortages in the economy have caused vehicle manufacturers to slow their production of new vehicles. Used vehicles have become more valuable because of this decrease in supply. While this is typically a good thing, in bankruptcy, one must be able to exempt all assets to prevent the trustee from selling the assets and giving the money to the creditors.
Florida currently only allows vehicle owners to exempt $1,000.00 of equity in their vehicle. This tiny exemption caused many people to elect to settle with their creditors or engage debt settlement companies because they couldn’t afford a new vehicle and didn’t want to lose their existing vehicle.
Thankfully, Bill 265 was filed on October 12, 2021. This Bill creates a new subsection to Florida Statute 222.25 which provides that a person may exempt $5,000.00 of equity in their vehicle if a person files bankruptcy on or after July 1, 2022.
Bill 265 unanimously passed the House on February 25, 2022. This morning, the Senate unanimously passed the bill as well. Now, the bill is on its way to the desk of Governor Ron. DeSantis who will hopefully sign the bill into law.
