Cars and Bankruptcy in New York City
Cars and Bankruptcy don’t go together, right? You’re worried. You’ve got a ton of debt, but now what? You’re filing a Chapter 7 Bankruptcy in New York City and you want to keep your car, but can you?
Yes, under certain circumstances.
1. If you’re using the Federal Exemptions (typically when you don’t own a home in New York, or, if you do own a home in New York and it has less than $150,000 in equity) you have $3,425 as an equity exemption to protect it.
How do you determine equity of a vehicle in a Chapter 7 Bankruptcy in New York City?
You take the amount you have left to pay on your note for the car and deduct what it’s presently worth, plus fees. So, let’s say you bought a 2012 Nissan Altima for $17,000.00. You put $1,000 down on the vehicle and you still have about $16,000 to pay to the bank before you get clean title. Now, you’ll go to Kelly Blue Book and do a search for your car (used). It will ask you a number of questions about the cars condition, and, it will then give you an estimate of what your car is presently worth to a private party buying it. As you can see below, a 2012 Nissan Altima in very good condition is worth approximately $13,500 to a private party interested in buying it. 
Your final step is to deduct the amount you still owe the bank-in this case, $16,000-from the actual present day value of the vehicle ($13,500) to determine the amount of equity you have in the vehicle. So, if we do that here, you have $2,500 in equity in that sexy vehicle of yours. Because the Federal exemptions allow you to exempt $3,425 in Chapter 7 Bankruptcy in New York, you will likely be able to keep the vehicle (provided there has been no fraud, recent transfer of ownership, expensive modifications, etc.)
2, If you’re using the New York Bankruptcy Exemptions, you reach the same result.
The same test applies if you’re using New York exemptions in your Chapter 7 bankruptcy. New York actually is more generous, and allows you to deduct up to $4,000 in equity in a motor vehicle (much more if it’s modified for disabled persons). So, you do the same math as above to determine the equity in your vehicle, and you’d still likely be able to keep it (with the same caveats surrounding transfers of ownership etc.)
You should also keep in mind that if your car has had any recent accidents or damage, make sure to take that into account when determining the value of the vehicle. You want to ask the mechanic/auto body shop to also give you a list of repairs that were recently performed and the cost.
Here’s my disclaimer and it’s something you really should keep in mind: There are so many things to take into account when you’re determining whether you’re going to be able to keep your vehicle in a Chapter 7 Bankruptcy in New York. I urge you to speak to a lawyer if you’re looking to file Bankruptcy or even if you have questions.