Can I Keep My Car if I File Chapter 7 Bankruptcy? Explained
When filing for Chapter 7 bankruptcy, one of the primary considerations is whether you can retain your car; this will depend on the value and exemptions available in your state. In this blog post, we will explore these aspects in detail.
Firstly, we will discuss how car exemptions work under New York’s bankruptcy laws and how they can help protect your motor vehicle from being liquidated by a bankruptcy trustee. Next, we’ll compare leased vs. financed cars in a Chapter 7 case and explain which scenario will likely allow you to retain possession of your vehicle.
Understanding Car Exemptions in Chapter 7 Bankruptcy in New York
Filing for Chapter 7 bankruptcy can be stressful, especially when worrying about losing your car. Fortunately, federal and state exemptions exist to help protect your vehicle from liquidation during bankruptcy.
- Federal exemptions: Under federal law, you may exempt up to $4,450 of equity in your car plus an additional $15,425 of the wildcard exemption if not already used for a total of $19,875. If your car’s equity is below the federal threshold or its value falls short of this amount, it should be protected from liquidation. The federal exemptions are available in New York and can be doubled if a married couple filing jointly owns a vehicle together.
- New York State exemptions: In New York State, residents are allowed to choose between using either federal or state exemption laws. The state’s motor vehicle exemption allows one to secure up to $4,8250 in equity from a single automobile (or even as much as $11,975 if the car is modified for use by someone with disabilities). The New York exemptions can also be doubled for a married couple who files and owns the car together.
To determine which exemptions best suit your situation and maximize asset protection during Chapter 7 bankruptcy proceedings in New York, consult an experienced consumer bankruptcy attorney. If you’re considering bankruptcy, it’s essential to understand the potential impact on your car loan.
If you own your car outright, the equity in your vehicle will be a factor in determining whether you can keep it. If you have a car loan, the bankruptcy trustee will consider the equity in your car.
It’s important to note that filing for bankruptcy may not necessarily allow you to keep your car if you’re behind on your car payments.
Working with a local bankruptcy lawyer can help you navigate these and other bankruptcy issues. Your attorney can help you understand your options for keeping your car, including negotiating with your lender or developing a repayment plan through Chapter 13 bankruptcy.
Ultimately, the equity in your car and the exemption amount available will determine whether you can keep your vehicle in a Chapter 7 bankruptcy case. If you’re concerned about losing your car, working with an experienced bankruptcy attorney who can help you protect your assets and achieve debt relief is essential.
Filing for Chapter 7 bankruptcy in New York can help you keep your car if it falls within the state’s exemption limits. Moving on, leased and financed vehicles require different considerations when filing for Chapter 7 Bankruptcy.
Leased vs Financed Cars in Chapter 7 Bankruptcy
When filing for Chapter 7 bankruptcy in New York, it’s essential to understand the differences between leased and financed cars. This distinction can impact whether you can keep your vehicle during bankruptcy.
- Leased Cars: If your car is leased, you typically have a contractual agreement with the leasing company that allows you to use the vehicle as long as you make timely payments. In most cases, if you continue making these payments during your Chapter 7 bankruptcy case, keeping your leased car should be no issue.
- Financed Cars: On the other hand, if your car is financed through a loan or another financing arrangement, things get slightly more complicated. The critical factor here is equity – how much value remains after subtracting any outstanding loans from the market value of your vehicle. You’ll need to ensure that this equity can be exempted under either federal or state exemptions available in New York. If so, then it’s likely that you’ll be able to keep your financed car during a Chapter 7 bankruptcy filing.
It’s important to note that if you’re behind on your car payments, the lender may have the right to repossess the vehicle regardless of whether you file for bankruptcy. However, filing for bankruptcy can provide some relief by temporarily stopping the repossession process.
If you’re considering bankruptcy and have questions about how it may impact your car loan or lease, it’s best to consult a local bankruptcy lawyer. They can help you understand the specific bankruptcy issues that may arise in your Chapter 7 bankruptcy case and advise you on the best course of action.
When submitting a Chapter 7 bankruptcy, it is essential to comprehend the distinctions between leased and financed automobiles to establish if they are exempt from liquidation. The following heading will discuss how to use the Wildcard Exemption for your car when filing for Chapter 7 Bankruptcy.
Using the Wildcard Exemption for Your Car
The wildcard exemption can be valuable if you’re filing for Chapter 7 bankruptcy in New York and want to protect your car from liquidation. The federal exemptions include a wildcard exemption that allows you to exempt up to $15,425 if you don’t use the homestead exemption.
To apply this wildcard exemption toward your car’s equity, follow these steps:
- Determine your car’s market value by checking resources like Kelley Blue Book.
- Subtract any outstanding loan balance on the vehicle from its market value. This will give you the amount of equity in your car.
- If your remaining equity is less than or equal to the available wildcard exemption amount ($4,450 + unused portion of the wildcard-$15,425), it can be fully protected during bankruptcy proceedings.
Note that state exemptions may also offer protection for vehicles. It’s essential to consult with a knowledgeable attorney, such as those at the Law Office of William Waldner when deciding which set of exemptions best suits your needs.
Conclusion
Fortunately, keeping your car through various exemptions in New York is possible. However, understanding the difference between leased and financed cars can also impact whether or not you can keep your vehicle. Additionally, utilizing the wildcard exemption may provide further protection for your car.
Keeping your car during a Chapter 7 bankruptcy depends on several factors, such as exemptions and ownership status. If you’re facing financial difficulties and considering bankruptcy, contact the Law Office of William Waldner today for expert guidance on navigating this challenging time while protecting what matters most.