Many people who are contemplating filing for bankruptcy relief, under the New Jersey bankruptcy laws, are concerned about whether they are able to keep their vehicles. Although individual’s situations vary, there are a few common requirements that are necessary for an individual to avoid auto repossession, in connection with a New Jersey Chapter 7 bankruptcy.
First and foremost, when filing for bankruptcy, the debtor must disclose on the petition all financial information, including assets and their values, liabilities, list of creditors, present and past income and expenses. The debtor may not pick and chose which creditors he wishes to include. The petition must reflect the estimated fair market value of the automobile. The New Jersey Bankruptcy Court accepts the NADA Guide auto values. However, an expert auto appraisal may provide an appraisal or testimony regarding an autos value.
Under Chapter 7, if your automobile is financed, the auto value may not be considerably greater than the loan payoff. The debtors’ bankruptcy attorney and the appointed interim trustee will perform an analysis to determine if the auto’s value is in excess of the allowable amount. Also, typically, but not always, the debtor must be current with the finance payments. Also, typically, but not always, the monthly auto finance payments after the filing must not result in an “undue hardship”, as determined by the court. The debtor may return the vehicle and eliminate the debt.
In a chapter 7 bankruptcy in New Jersey, it is easier to keep a leased vehicle as compared to a financed vehicle. The main reason for the difference is that a financed vehicle is owned, while the leased vehicle is not owned. The value of the leased vehicle is irrelevant. Typically, the only criterion is that the debtor is current with the payments. The debtor may return the auto and eliminate the lease debt.
The only criterion determining, whether a debtor may keep their vehicle, with no financing or lien, is based on the excessive value basis that is explained above, in connection with the financed vehicle.
While most debtors in New Jersey are usually able to keep their vehicle, it is worth the time and effort to get in touch with an experienced NJ bankruptcy lawyer. At the Law Offices of Robert Manchel, our legal team will inform you as to how bankruptcy can help you in relation to your personal needs and finances. Please call Robert Manchel today at 866-503-5655 for more information.