Can You Keep Your Car When Filing for Bankruptcy in New Jersey?
If you are considering filing for bankruptcy in New Jersey, one of the common questions that might arise is whether you can keep your car during the process. The answer largely depends on several factors including the type of bankruptcy you file, the equity in your car, and the exemptions available to you under New Jersey law.
In New Jersey, individuals typically file for either Chapter 7 or Chapter 13 bankruptcy. The choice between these two can significantly impact your ability to keep your vehicle.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy involves the liquidation of non-exempt assets to repay creditors. However, New Jersey offers several exemptions that may allow you to keep your car:
- Motor Vehicle Exemption: New Jersey provides a $15,000 exemption for motor vehicles. This means if your car's equity is less than this amount, you can keep it.
- Wildcard Exemption: If your car's equity surpasses $15,000, you may be able to use a wildcard exemption, which can cover additional value in personal property.
It's essential to assess your vehicle's current market value versus what you owe on it to accurately determine your equity. If you're upside down on your loan (meaning you owe more than the car is worth), you may not have any equity, which makes it easier to keep the vehicle.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is often more advantageous for individuals looking to keep their vehicles. This type of bankruptcy allows you to reorganize your debt and create a repayment plan over three to five years.
- Keep Your Car Payments: If you're current on your car payments and can maintain them throughout the bankruptcy process, you can keep your car.
- Secured Debt Treatment: Under Chapter 13, you can potentially reduce the amount you owe on your car loan through a process called "cramdown," especially if the car was purchased more than 910 days before filing.
This flexibility can make Chapter 13 a preferred option for those wanting to retain their vehicle while managing debt.
Consulting with a Bankruptcy Attorney
Navigating bankruptcy laws can be complex, and the specifics of your case may affect your ability to retain your car. Consulting with a knowledgeable bankruptcy attorney in New Jersey is highly recommended. They can help analyze your financial situation, explain your options, and guide you on the best course of action to protect your assets.
Conclusion
In summary, whether you can keep your car when filing for bankruptcy in New Jersey depends on various factors, including the type of bankruptcy you choose and your car's equity. Always seek professional legal advice to ensure you make informed decisions during this challenging time.