There are many reasons that people feel concerned about filing for bankruptcy. Some people worry about the effect on their credit score. Others worry about whether bankruptcy will affect their job or financing options.
Another common concern about bankruptcy is the requirement to liquidate assets. Those who qualify for Chapter 7 bankruptcy can benefit from a discharge quickly after they file without repayment requirements.
However, the trade-off for the quicker discharge in a Chapter 7 filing is the obligation to liquidate assets to repay creditors. Some of your personal property may get sold by a trustee before the courts will approve your discharge. Is your vehicle at risk in a New Jersey Chapter 7 filing?
You have the right to exempt some of your property
Some of your property is not subject to liquidation, which means you can keep it. There are federal bankruptcy exemptions, as well as state bankruptcy exemptions. You can use the New Jersey state exemptions, or you can choose to use federal exemptions.
New Jersey does not have particularly strong state exemptions. There is no specific protection for motor vehicles and only limited options for exempting certain personal property. There are two exemptions that could apply to a vehicle, each worth $1,000. Although state lawmakers have introduced legislation to increase state exemptions, it faces an uncertain future.
There is a federal exemption that applies to vehicles that will allow you to protect up to $4,000 in accrued equity in your vehicle. If you have more value than that in your vehicle currently, the trustee overseeing your bankruptcy may require that you refinance the vehicle and you see excess equity to repay your creditors.
A close look at your circumstances will help you choose the right process
Everything from your income and assets to the nature of your debts will influence the kind of bankruptcy you file and what exemptions you claim.
You need to create a comprehensive inventory of your personal property and review months of financial records to make an informed decision about bankruptcy in many cases. Learning more before you take the first steps with your bankruptcy filing can help set you up for success and an eventual discharge.