I'm reading a page which lists limits on equity that can be kept when filing for bankruptcy. In particular, this page says the following:
You have a motor vehicle that is valued at $15,000 and there is a $6,000 secured debt that you owe against the vehicle, resulting in equity of $9,000 in the vehicle.
The insolvency exemptions in Saskatchewan allows an insolvent individual to keep a car with equity of $10,000.
Since the equity in the vehicle ($9,000) is less than the SK bankruptcy exemption for a motor vehicle ($10,000) you would be able to keep this vehicle.
How does this make sense? What if I have a $1000 equity in my vehicle (and the rest is being financed and thus belongs to the creditor), do I still get to keep it? So the less I have paid the more chance I keep something? This is clearly absurd.
I would appreciate a clarification how these limits work. In my understanding, one can keep up to a certain amount of equity in his/her vehicle or house if/when it is sold. Is this correct?