Can Bankruptcy Save My Car in New York City?

This is a big concern for people considering bankruptcy and something we get a lot of questions about in our law office in New York.  Filing for bankruptcy does not necessarily mean you will lose your car, in fact most all of our clients will be allowed to keep their car during and after the bankruptcy process.  Each situation is different, but if keeping your automobile is a big concern there are numerous strategies a qualified bankruptcy attorney can employ.

We run into a few basic scenarios when it comes to a client’s automobiles.  They are either behind on their car payments, current on their car payments, or they own the vehicle free and clear.

Both Chapter 7 and Chapter 13 bankruptcies specifically address both cars with loans and those cars that are owned outright.  In both types of bankruptcies an “automatic stay” is immediately imposed upon filing that will halt any collection or repossession actions against the car.  The bank can’t take your car in the middle of the night and will have to cease their collections attempts (phone calls, letters, etc.) as well.

If you still owe money on your car make sure it is worth it to you to keep it.  While bankruptcy will pause any collection or repossession action, generally speaking you will have to repay the past due amount over time and remain current or ultimately face repossession even though you successfully filed for bankruptcy.  New York State exemptions will allow you to keep your car under Chapter 7 bankruptcy, but if you can’t afford your car anymore and owe a lot on it, then bankruptcy will allow you to walk away free and clear without ever owing another cent.

If you are way behind on car payments and expecting the repo truck at any moment then filing a Chapter 13 bankruptcy is sometimes a better way to keep your car.  If you are behind on your car payments a Chapter 13 Bankruptcy will allow you to pay the arrearage over 3 to 5 years so you can become current on the loan over time.   If your car was purchased 910 days before the filing of your bankruptcy your attorney may also be able to perform a “cram down” that will lower your loan to a current fair market value as well.

If you own your car outright on the other hand, then the value of the car will come into play in your bankruptcy as the total amount of property you are allowed to keep is ruled by the prevailing exemptions in New York.  Fortunately New York has exemptions that allow most all of our clients to keep their cars even if they own them outright and have significant equity in them.   At the end of the day, if we can’t find a way to protect your car with the exemptions through Chapter 7, we can almost always find a way to protect it through Chapter 13 repayment plan.

Different approaches are needed for different cases when it comes to saving an automobile through bankruptcy.  Your home, credit cards and other secured and unsecured debt will also factor into your overall bankruptcy needs.  To ensure the results you need, work with a qualified bankruptcy firm that is familiar with both Chapter 7, and Chapter 13 filings as well as the intricacies of converting between the two.   Working with a qualified bankruptcy law firm is critical to the overall success and to ultimately keeping your car.

If you live in New York City, and have questions about how your car can be saved through bankruptcy please give the Law Offices of William Waldner a call at 212-244-2882 for a free bankruptcy consultation.  We will look at your overall situation and discuss the best approach to saving your vehicles and other assets while at the same time eliminating your toxic credit card debt.  You have a legal right to a fresh financial start and debt free life and we want to help get you there without delay.

This article is intended for educational purposes only. By reading this article no attorney-client relationship has been created.