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Can I Keep My Car in a New Jersey Chapter 7 Bankruptcy?

Whether you can keep your car in a Chapter 7 Bankruptcy in New Jersey depends on various factors, including the value of your car, the available exemptions, and your ability to continue making payments on the car loan. Here's what you need to consider:

  1. Car Value and Exemptions: New Jersey provides exemptions that allow you to protect certain property from being sold to pay off creditors. These exemptions can vary over time, so it's important to check the current limits. If the equity in your car (the value of the car minus any outstanding loan balance) falls within the applicable exemption limits, you're more likely to be able to keep your car.

  2. Car Loan: If you have a car loan and want to keep your car, you will need to continue making payments on the loan. In some cases, you may be able to reaffirm the car loan. Reaffirmation is an agreement between you and the lender that allows you to exclude the car loan from the bankruptcy discharge, essentially preserving your obligation to repay the loan.

  3. Options for Car Equity: If the equity in your car exceeds the exemption limit, you have a few options:

    • You can pay the Bankruptcy Trustee the non-exempt equity amount in cash to keep the car.

    • You may consider redeeming the car by paying the fair market value of the car in a lump sum to the lender, which can be beneficial if the car is worth significantly less than the loan balance.

    • If you are unable to protect your car under the available exemptions, and it's not feasible to redeem or pay the non-exempt equity, the Bankruptcy Trustee may sell the car to satisfy your debts.

In summary, the ability to keep your car in a New Jersey Chapter 7 bankruptcy depends on the car's value, available exemptions, your car loan status, and your willingness and ability to make payments and possibly reaffirm the loan.

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