One of the main concerns many people have when filing for bankruptcy is whether they can keep their automobiles. Whether a debtor will be able to prevent auto repossession depends on a variety of factors (just like our previous discussion of whether a debtor will be able to keep their home).
First, the fair market value of the automobile must be determined. The permitted federal exemption for an automobile is $3,225.00. Second, we must look at whether you have any loans or financing on the vehicle. If you do, we must look at the difference between the loan payoff amount and the value of the vehicle. If the difference exceeds $3,225.00, then you may have an issue with keeping your automobile. You may also have a problem keeping your automobile if you own your automobile outright and the market value exceeds the above-referenced federal exemption amount. However, you may still be able to keep your car. If a debtor does not use the homestead exemption ($20,200.00) on property they own, they are permitted to use half this exemption amount on other assets, such as their automobile.
For example, let’s say you live in Jersey City and own a vehicle with a market value of $10,000.00. You also have a loan on this vehicle with a payoff amount of $8,000.00. The equity you have in this vehicle is $2,000.00. This amount is covered by the federal exemption and you will be able to keep your vehicle. Let’s say, however, you own a vehicle with a market value of $10,000.00 outright (no loans or financing). You also do not own any property in New Jersey. You can use the federal motor vehicle exemption as well as half of the homestead exemption in order to keep your vehicle.
As you can see, there is more than one way to file for bankruptcy in New Jersey and keep your vehicle. To discuss whether you will be able to keep your vehicle and/or any other assets you may own if you file for bankruptcy in New Jersey, contact Daniel Gershburg, Esq., P.C. today!
