Is Your Vehicle Protected When You File Bankruptcy In Colorado?
A recent case out of the Western District of Oklahoma got me thinking that I needed to write an article to clarify just what kinds of vehicles you can protect when you file bankruptcy in Colorado.
Judge Loyd down in Oklahoma confronted this issue. In In re Smith a filer exempted a golf cart that he uses as his primary means of transportation. The trustee objected. The Oklahoma vehicle exemption statute doesn’t define what a vehicle is, so Judge Loyd settled the dispute.
The judge started with the language of the Oklahoma statute. While the term “golf cart” usually relates to a motorized cart used to transport golfers around a golf cart, the judge found that definition didn’t apply in this case.
The judge further distilled the definition of motor vehicle by referring to the dictionary. There, a motor vehicle is “an automotive vehicle not operated on rails,” or an “automobile” as a “four-wheeled automotive vehicle designed for passenger transportation.”
Remember, Mr. Smith used the cart as his primary transportation. And, although the cart was designed for use on a golf course, it is capable of being used for other things, like transporting the driver to the grocery store.
The judge then referred to the oft-cited principle that “to affect their humanitarian purposes exemption laws must be liberally construed in favor of the claimant of an exemption”. Melding that principle with the definition of motor vehicle and the facts of the case, Judge Loyd found that the golf cart was exempt.
Are Golf Carts Exempt When You File Bankruptcy In Colorado?
So, is this a good case for filers in Colorado who are trying to protect their golf carts? In classic lawyer weasel-ese, “it depends”.
Colorado’s vehicle exemption statute is more explicit than Oklahoma’s. In fact, Colorado Revised Statute section 13-54-102(j) states that the exemption does not apply to “snowmobiles, all-terrain vehicles, golf carts, boats or other watercraft, travel trailers, tent trailers, or motor homes.”
But what if, like Mr. Smith above, a Colorado filer is using one of the excepted types of vehicles as her primary transportation? I’ve confronted this issue in one case.
One of my clients had an older van that came out of the factory as a motorhome. But my client’s vehicle was old and in poor condition. The systems that came with the vehicle when it was new, like a refrigerator, heater, water pump, and toilet, no longer worked. It was a shell of its former self and could no longer serve as a motor home. After we provided pictures of the van and repair quotes to the trustee, he dropped his objection to our use of the vehicle exemption.
This is a very fact specific question. I wouldn’t hesitate to use the vehicle exemption in the right situation, but the facts have to be there.
Are There Other Exemptions That Can Protect Vehicles In Colorado
But let’s say that someone has a snowmobile, ATV, golf cart, boats, travel trailer, tent trailer, or motorhome. Let’s also say there isn’t an argument that it should be treated as an exempt vehicle. An experienced bankruptcy attorney is going to dig deeper to see if there is any way to protect his client’s assets.
Sometimes, you don’t have to go very far. Colorado Revised Statute 13-54-102(i)(1) allows a person to protect items used for her business. The statute allows someone to exempt such items up to $60,000 if they are for the debtor’s “primary occupation” or up to $20,000 if they are for any other gainful occupation.
I’d be willing to argue this exemption protects an ATV if the filer uses the ATV for her business. And the lesser exemption could even be used if the business is just a side hustle the filer does on the weekend.
Using The Homestead Exemption To Protect A Travel Trailer In Colorado
Finally, with respect to travel trailers, tent trailers, and motorhomes, we can also look to the Colorado homestead exemption for protection.
The Colorado homestead exemption protects up to $250,000 in equity in a bankruptcy filer’s residence. That amount is $350,000 if the filer is over the age of 60 or is disabled. She can also use the $350,000 amount if she has a dependent in the home over the age of 60 or is disabled.
The homestead exemption covers travel trailers, tent trailers or motorhomes. Here is the kicker, though: you have to live in the trailer or motorhome to use the homestead exemption.
Also, if the filer owns a regular home and one of these other items, she can only claim the homestead exemption in one of them, either the home, trailer, or motorhome.
Talk To A Top-Rated Denver, Colorado Bankruptcy Attorney About Protecting Your Vehicle
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