Legal Question in Bankruptcy in Oregon

Re: Chapter 7 exemptions

Your information is correct. ORS 23.160 allows an individual to exempt $1,700 of equity in a motor vehicle. If your sister owns the vehcile free and clear of any liens then she has $5,300 of nonexempt equity. Likewise, it sounds like she has about $5,000 of nonexempt equity in her homestead. In a chapter 7 bankuptcy she could offer the estate (the trustee) the value of these nonexempt assets and retain them. Alternatively, she could file a chapter 13 repayment plan. In chapter 13 a person keeps all of their property, but the value of nonexept property is releavant to establish the minimum amount that must be repaid through the plan. She could sell you the vehicle, but it would have to be for a reasonable equivalent value which would leave her with the nonexempt cash proceeds from the sale. If it were not sold for a reasonable equivalent value the trustee may be able to avoid the transfer as fraudulent. She would not be able to "sell" you the equity in her house. I think what would happen is she would give you a security interest in the house in exhchange for new value (i.e. $5,000). As an insider any transaction between you and your sister that occurred in the year before the bankruptcy would be scrutinized by the trustee. I would advise that your sister consult with a qualifed attorney in her area before she files for bankruptcy.