Car exemption · Beverly Hills
The California Motor Vehicle Exemption
The California motor vehicle exemption protects $8,625 of equity in your car under either exemption system (amount effective April 1, 2025). Under System 2, the wildcard can protect more. Call (310) 362-9071 and we will check how much of your car's value is safe.
- $8,625 in System 1 (CCP 704.010) and System 2 (CCP 703.140(b)(2))
- The exemption protects equity, not the full value
- System 2 lets you add the wildcard on top
- A car loan must still be paid if you want to keep the car
At a glance
What the exemption protects: equity
The motor vehicle exemption protects equity. Equity is what the car would sell for, minus what you still owe on the loan. If your car is worth $14,000 and you owe $10,000, your equity is $4,000.
The value is measured on the day you file. We use used-car guides and the car's real condition, such as mileage, dents and needed repairs. A trustee looks at what the car would bring in a sale, not what a dealer would charge you to buy it.
If your equity is under $8,625, the exemption covers it in either system. The trustee has nothing to gain by selling the car. If your equity is higher, the system you choose starts to matter. Our System 1 vs System 2 comparison shows how the rest of your property affects that choice.
Figures by system
| Item | System 1 | System 2 |
|---|---|---|
| Motor vehicle exemption | $8,625 (CCP 704.010) | $8,625 (CCP 703.140(b)(2)) |
| Extra protection from a wildcard | None | $1,950 plus any unused home equity amount, up to $38,700 |
| Work vehicle under tools of the trade | Commercial motor vehicle up to $4,850 within the $10,950 tools limit | Tools of the trade up to $10,950; whether a vehicle qualifies depends on the facts |
All amounts are effective April 1, 2025. In System 2, the wildcard exemption can be stacked on top of the car exemption. For a renter who does not use the System 2 home exemption, that can mean the $8,625 car exemption plus a wildcard of up to $38,700, if nothing else needs the wildcard.
If you drive a truck or van for work, the tools of the trade exemption may also apply. Under System 1, a commercial motor vehicle can be protected up to $4,850 as a tool of the trade.
Examples: paid-off and financed cars
- Paid-off car worth $7,500. Equity is $7,500. The $8,625 exemption covers it under either system.
- Paid-off car worth $16,000, renter. Under System 1, $7,375 is exposed. Under System 2, the car exemption covers $8,625 and the wildcard can cover the other $7,375. System 2 is the clear pick.
- Paid-off car worth $16,000, homeowner with large equity. System 1 protects the home but leaves $7,375 of car equity exposed. We would look at the whole picture, including Chapter 13, before choosing.
- Financed car worth $22,000, owing $19,000. Equity is $3,000, which the exemption covers. You keep the car by staying current on the loan.
- Financed car worth $15,000, owing $21,000. There is no equity, so there is nothing for a trustee to take. The question is whether to keep paying the loan.
Learn about your options for a financed car on our page about how to keep your car in Chapter 7.
Spouses and more than one car
Married couples who file together must use the same exemption system. Whether the car exemption can be claimed once or once per spouse depends on the system and the property. We check this for every vehicle you own.
If you have two cars, the $8,625 vehicle exemption is one total for all of them combined. Equity above that may need the wildcard or a different plan. A second car with equity may need the wildcard, the tools of the trade exemption or a different plan. A car that belongs to a spouse who is not filing may still be community property, so we list it and explain why.
Car exemption mistakes to avoid
- Using the dealer price. The trustee uses a realistic sale value. Note any damage or high mileage.
- Paying off the car right before filing. A large payment to a lender, or to a relative who lent you money, can be undone by the trustee.
- Transferring the title. Putting the car in someone else's name before filing can be reversed and can put your discharge at risk.
- Missing car payments after filing. The exemption protects equity, not the loan. The lender can still repossess if you fall behind.
What it costs
- Chapter 7: flat attorney fee from $1,200, plus the $338 court filing fee
- Chapter 13: attorney fee quoted in writing, and part of it can be paid through the plan
- Payment plans are available, and the first consultation is free
More on what you keep
- California bankruptcy exemptions: what you keep
- California Exemptions: System 1 vs System 2
- The California Homestead Exemption and How Yours Is Figured
- The California Motor Vehicle Exemption
- The Wildcard Exemption Under CCP 703.140(b)(5)
- Retirement Accounts, 401(k)s and Pensions in Bankruptcy
- The Tools of the Trade Exemption
- Household Goods, Jewelry and Personal Property
- Wages, Tax Refunds and Cash on Filing Day
Motor vehicle exemption questions
How much is the California motor vehicle exemption?
The California motor vehicle exemption is $8,625 under both System 1 and System 2 (effective April 1, 2025). It protects equity, meaning value minus what you owe.
Can I protect a car worth more than $8,625?
Yes, you can often protect a car worth more than $8,625 if part of it is financed or if you use System 2. The System 2 wildcard can be added on top of the car exemption.
Will the trustee take my financed car?
No, the trustee usually will not take a financed car with little or no equity. There is nothing to sell for creditors. You still have to pay the loan, reaffirm it or make another arrangement to keep the car.
Does the exemption cover a work truck?
Yes, the motor vehicle exemption can cover a work truck, and the tools of the trade exemption may add protection for a vehicle you need to earn a living. We decide which claim works better for you.
What if my car is worth more than all my exemptions?
If your car is worth more than all your exemptions, Chapter 13 can let you keep it while paying creditors the extra value over time. See our guide to what you keep in bankruptcy.
Free consultation
Find out if your car is safe
Call (310) 362-9071 or send the form. Bring your loan statement and the car's mileage and we will run the numbers with you.
Law Offices of John Asuncion9454 Wilshire Blvd., Penthouse Floor
Beverly Hills, CA 90212
(310) 362-9071
Monday to Friday, 9 a.m. to 6 p.m.