One of the most common questions that we are asked by our bankruptcy clients is whether they can keep their car when they file for bankruptcy. In most cases the answer is yes.

You are entitled to certain exemptions to protect property, including a motor vehicle exemption. In New York State the exemption for one motor vehicle is up to $4,000.00 in value or up to $10,000.00 if equipped for use by a disabled debtor (N.Y. Debtor and Creditor Law § 282(1)).  Value is calculated by using a NADA or Blue Book Value (the Trustee will have a preferred valuation method) less any outstanding loans. For example if you have a vehicle with a NADA value of $10,000.00 and an outstanding loan in the amount of $6,000.00 then the value of the vehicle for exemption purposes is $4,000.00.

If you have a loan on the vehicle and are planning on exempting it in the bankruptcy then your lender will most likely require a reaffirmation agreement. A reaffirmation agreement reaffirms the debt with the lender which means you are agreeing to pay the debt which otherwise would be discharged in the bankruptcy. It is important to remember that a loan on a vehicle is a secured loan so if you stop making payments the creditor can repossess the vehicle. 

Every bankruptcy case is different, there are many factors to consider when deciding to use exemptions to keep certain property and to reaffirm debt. It is important that you have an experienced bankruptcy attorney to help you determine if bankruptcy is right for you and to help navigate you through the many rules of bankruptcy.

Contact us today at 315-255-3368 for a free consultation. 

This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly. 

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