(CN) – A California-based real estate agent could claim a bankruptcy exemption for her 2001 Mercedes 320E if a federal judge determines it is a tool of her trade, rather than “just a sweet ride,” an appeals court ruled.
“We hold today that a motor vehicle, even a Mercedes, may fall within California’s so-called ‘wildcard’ or ‘grubstake’ exemption,” U.S. Circuit Judge Barry Silverman wrote for the panel.
In November 2006, Angie Garcia used her Benz as collateral to borrow $26,160 from Orange County’s Credit Union.
When she filed a Chapter 7 bankruptcy with nearly half of its balance outstanding, she claimed an exemption for the car – valued at $5,350 – under a California civil code protecting “any property” less than $18,350.
Garcia also cited a federal statute allowing debtors to avoid nonpossessory, nonpurchase-money liens on exempt property shown to be a tool of the debtor’s trade.
A bankruptcy court found that the statutes did not apply because California exemption statutes deal with cars explicitly, and case law barred the protection of luxury items.
Disagreeing with this decision, a federal judge pointed to the “any property” language of the state code, and instructed the bankruptcy judge to determine whether Garcia’s Mercedes was a tool of her trade.
The 9th Circuit Court of Appeals upheld that finding on Tuesday.
“It remains to be seen whether Garcia’s car qualifies as a tool of her trade,” the 8-page opinion noted.
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