You may be able to protect your car in bankruptcy. If you are filing a Chapter 7 petition, it is important that you be current on your car loan or lease. A Chapter 13 filer can pay any loan or lease arrears through the bankruptcy plan, but must resume the loan or lease payments immediately after filing.
New Jersey state law provides a $1,000 exemption per vehicle. Federal exemptions are almost always more favorable. Under federal bankruptcy law, an individual may exempt $4,000 in one motor vehicle. In addition, if the real estate exemption is not needed, bankruptcy law allows for a “wildcard” exemption of $12,575 which may be spread out among any property, including one or more vehicles.
Through a informed use of bankruptcy exemptions, you can keep your assets, wipe out debt, and secure a fresh start.