If you own the vehicle outright (i.e. you paid off the loan) then the issue is simple.  In most instances, these exemptions are enough to protect the car. If you file a chapter 13, there is nothing further you need to do.

If you still owe money to a finance company or bank for a loan taken out to buy the car, then things get a little more involved.  Under the Bankruptcy Code, you have one of three (3) choices when it comes to the car and the loan:

  1. you can turn in the car with no liability for a repossession deficiency down the road (not really a practical option for most people, as they do need the car);
  2. pay off the loan, or redeem it (also not practical, unless there is a small remaining balance); or
  3. reaffirm the debt, which would result in the car loan not being wiped out by the bankruptcy (“discharged”), and if the car gets repossessed after the bankruptcy is over, you would be responsible for any deficiency after its sale.

Naturally, this last one should only be done after careful discussion with a lawyer. Learn more here.

Want to Know More?

If you live in southern New Jersey and are considering filing bankruptcy, please feel free to call me at 856-432-4113 or contact me through this site for a free consultation in my Woodbury office to discuss your case.

If you are looking for more information about bankruptcy, then download my free book,Top Questions People Ask About Filing Bankruptcy in New Jersey.

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Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.