If you have already met a bankruptcy attorney or are planning on meeting one you can expect the attorney to use the word equity multiple times during your consultation.  Unfortunately most bankruptcy lawyers assume that you already know what the term means and how it applies, this is probably not the case.

Equity is one of the most important factors that a debtor must consider if they are thinking of filing for bankruptcy.  If you have too much equity then you may lose your probably or have to pay back the equity amount to keep your property.  So what does equity really mean?

Equity is basically a math formula, it is the difference between what the market value is (on the current item) and how much is owed (on the same item).    Market value is how much you could get for it if you sold it.  For vehicles market value is easy to determine because you just look at NADA Values, Blue Book values or Black Book values.    Here is an example of equity in a vehicle:


Market Value = $14,000

Outstanding Loan amount  = $7,000

Equity = Market Value ($14,000) minus Owed Amount ($7,000)

Equity = $7,000


The same formula would be applied to houses, transportation, land or anything of value.

Here is another example where there is NO EQUITY in a vehicle:


Market Value = $14,000

Outstanding Loan amount = $17,000

Equity = Market Value ($14,000) minus Owed Amount ($17,000)

Equity = -$7,000  (negative)


If you have an asset that has zero or negative equity then it is worthless in the bankruptcy world.

If you are thinking of filing for bankruptcy and would like to schedule a free consultation with a local bankruptcy attorney  then please contact Shmucher Law, PL by calling 305.741.5553 or 954.309.5559.  We offer free consultations in any of our office locations including Boca Raton, Fort Lauderdale, Miami, Plantation, and Sunrise Florida