Bay Ridge Bankruptcy Lawyer discusses keeping your car in a Chapter 7 Bankruptcy
I have devoted several blog posts to this topic, but the topic keeps getting brought up by clients, not only in Bay Ridge , but all over Brooklyn and Manhattan, so I will devote some more time to it, as I love my people.
So lets attack this : What happens to my car if I file for a Chapter 7 Bankruptcy in New York?
Well, your favorite Bay Ride Bankruptcy Lawyer says a few things can happen.
- If you lease your vehicle in New York and you file for Bankruptcy, nothing happens. You either get to keep the vehicle and re-affirm it (unless its a new Mercedez Benz, which can indicate bad faith), or you can give it back and you’re no long responsible for the vehicle and its deficiency.
- If you own a vehicle and file a Chapter 7 in Brooklyn or Manhattan: This depends on whether there is significant equity in your vehicle. If there is no equity in your vehicle, and typically there is not since you’ve likely made a small down payment on the vehicle, your vehicle will depreciate quicker than you’re paying off your note on your vehicle. In English, your car is worth less than whats owed on it. Great, keep the car if you want or give it back. Choice is yours.
- If you own a vehicle in Brooklyn or Manhattan (you’re crazy-the paring garage’s will take your first born its so expensive) and you have significant equity in the vehicle before you file for a Chapter 7 Bankruptcy in Brooklyn or Manhattan, you will have a choice. You need to know, from your trusty Bay Ridge Bankruptcy Lawyer, that you can exempt up to $2400 of equity in the vehicle, or $4800 if you file jointly (romantic), which will be yours if and when your car is sold. That means if your car in Bay Ridge, Park Slope, or Williamsburg is worth $10,000, technically the Bankruptcy Trustee in Brooklyn can only get their hands on $7600 of that equity if they sold the vehicle. The remaining $2400 is yours. But be forewarned that if you own your car outright OR have significant equity, the Trustee will likely sell your car and pay off creditors with the money (and give you $2400 or $4800.)
- You can also negotiate to purchase your car in a Brooklyn Bankruptcy…from yourself. Lets say that car is worth $10,000, and you have your $2400 exemption, the Trustee is still going to have to pay expenses to sell your car (auction price, fees, shiny salesman guy, etc). Therefore you make the Trustee an offer. Your Brooklyn Bankruptcy Lawyer says to the Trustee: “Trustee (insert name), my clients are willing to give you $6000 for the vehicle in two payments of $3000 each. Love (or sincerely), Brooklyn Bankruptcy Lawyer Daniel Gershburg.” The trustee may accept this, or they may simply say I don’t like that offer make me another one. Either way, if you have some disposable cash, you can and should be able to buy your car back. On the other hand, for giving up a car worth several thousand, you’d also be able to get out of debt sometimes over $100,000.00. In any case, the choice is yours.
So now you know all (most) there is to know about whether your should file for Chapter 7 Bankruptcy in New York City if you own a car. There are many more issues surrounding this topic, so please talk to a Bankruptcy Attorney in Bay Ridge, Park Slope, Williamsburg, Sheepshead Bay, or anywhere you may live in Brooklyn, before filing.