Snap-On Tools and Bankruptcy

This post pertains mostly to car mechanics, but should be considered by anyone with a significant amount of valuable tools.

Lets say you’re a typical auto mechanic. You’ve spend a good about of money buying tools during your business including buying things on credit from your Snap-On van that visits the shop every week. What happens if you need to file bankruptcy?

First off, Snap-On tools to retain their value (this includes other pro tool makers like MAC, Matco, etc…) so they will be an asset that needs to be disclosed in bankruptcy and exempted. Federal exemptions have a small tools of the trade exemption, but even including that and the wildcard, you would max out at around 11k in value. Hawaii exemptions have a more generous tools of the trade exemption, so that may be the way to go if you have a serious collection of tools and need them to stay in business.

Snap-On is will also actually file a UCC-1 security interest for the tools you buy on credit. Being a secured loan means Snap-On can use the court system to take back unpaid for tools. Unlike other creditors like OneMain, Snap-On will repossess or file for replevin for unpaid tools.

So how to deal with it? You can always reaffirm or keep paying on the Snap-On debt. This is the most common as many Snap)On users are pretty dedicated to their brand. You can also opt to pay for the tools in a chapter 13 over a 5 year period.

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