If you file for Chapter 7 bankruptcy in New Jersey, you can protect some equity in your car, truck, van, or other vehicle by using New Jersey's general personal property exemption. Or, if you choose to use the federal bankruptcy exemptions, you can protect even more equity with the federal motor vehicle exemption. Learn more here.
(For more information about exemptions, including how they work and which ones you can use, see our Bankruptcy Exemptions area. For information specific to the motor vehicle exemption, see our Motor Vehicle Exemption in Bankruptcy area.)
The Personal Property Exemption and Your Car
New Jersey’s general personal property exemption plays a large role in determining whether or not the bankruptcy trustee can take your vehicle to repay your unsecured creditors. If the equity in your car is less than New Jersey’s personal property exemption (assuming you are not using the exemption for other property), then the trustee cannot sell it. If the equity in your car is significantly more than the applicable exemption amount, the trustee is likely to sell your car to repay your unsecured creditors. For details, see The Motor Vehicle Exemption: Can You Keep Your Car in Chapter 7 Bankruptcy?
Keep in mind that even if your car is safe from the bankruptcy trustee, the lender may be able to repossess your car during or after bankruptcy. To learn more, see Your Car in Chapter 7 Bankruptcy and If You Are Behind on Your Car Payments, Can Chapter 7 Help?
The Amount of New Jersey’s General Personal Property Exemption
In New Jersey, you can to exempt up to $1,000 in equity in your car or other vehicle by using the general personal property exemption.
The Federal Motor Vehicle Exemption
New Jersey allows you to choose between the state exemptions or the federal bankruptcy exemptions. If you decide to use the federal bankruptcy exemptions, you can exempt up to $3,450 of equity in your car.
Can Married Couples Double New Jersey’s Personal Property Exemption?
Some states allow married couples filing a joint bankruptcy petition to double the listed exemption amounts. In New Jersey, if you are a married couple filing a joint bankruptcy you can double your general personal property exemption to $2,000.
(To learn about the advantages and disadvantages of joint bankruptcy filings, see Nolo's section on Bankruptcy Options for Married Couples).
What Vehicles Are Covered by the Personal Property Exemption?
New Jersey’s general personal property exemption applies to any type of personal property including your car, truck, van, or other vehicle.
Checking New Jersey’s Exemption Laws
You can find New Jersey’s general personal property exemption at New Jersey Statutes Annotated § 2A:17-19.
When the New Jersey Exemption Amounts Are Updated
The exemption laws in New Jersey change periodically. Be sure to check the latest exemption amounts before filing bankruptcy.