Can we keep our tractor/snowmobile/four wheeler and make payments on it in a chapter 13 bankruptcy if we use it for snow removal purposes?

Probably not, not unless you are willing to pay through the nose for it.

In a chapter 13, if you own the tractor/snowmobile/4 wheeler free and clear, then the chapter 13 trustee will include this in a “liquidation analysis,” where the trustee determines how much he could liquidate your assets for to use to pay off your creditors.  For instance, if you have a tractor worth $5,000 and we cannot protect it under any exemption, then you would have to pay the liquid value of it into your bankruptcy plan.  You would have to pay $5,000 to your creditors as part of your 36-60 month chapter 13 plan.

On the other hand, if you have a loan against the tractor/snowmobile/4 wheeler, the trustee will object to it’s retention as a “toy” which is not necessary to your household needs or your reorganization.  If you propose to keep this toy, the trustee will demand that you not only pay the secured loan, but pay that same amount to your creditors, in addition to the secured loan.  For example, if you owe $5,000 on the tractor, you would have to pay $5,000 to that creditor and then also pay $5,000 more to your unsecured creditors.  That tractor now costs you $10,000 to keep.

Today in court I saw an attorney make an interesting argument in front of our Chief Judge Thurman.  He argued (and had affidavits and a doctor’s note to back him up) that the debtor had a bad back and needed his 4 wheeler for snow removal in the wintertime.  (This is Utah, and it gets very, very snowy).  In other words, he argued that it was not a toy, but a medical necessity.  The judge shot him down and told him that the long-standing policy against the retention of toys was not changing in this case.  The judge reasoned (correctly), that it would be cheaper to hire a neighborhood boy to shovel the walks when necessary, instead of double paying for the 4 wheeler.

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