If you file for bankruptcy in New York, the New York motor vehicle exemption protects up to $4,000 in car equity, double that for married couples filing jointly, and $10,000 if your vehicle is equipped to accommodate a disability. You can also use the wildcard exemption to protect equity in your car, truck, van, or other vehicle. Read on to learn more about the New York car exemption.
(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 Motor Vehicle Exemption and Your Car
New York’s motor vehicle 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 York’s car exemption, 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 York’s Motor Vehicle Exemption
In New York, you can exempt up to $4,000 in equity in your car or other vehicle. Disabled debtors can exempt up to $10,000 if the vehicle is specially equipped for their disability.
The Federal Motor Vehicle Exemption
New York 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.
Using New York’s Wildcard Exemption to Protect Your Car
If the equity in your car is more than $4,000, you may be able to cover the extra equity by using a wildcard exemption. New York has a wildcard exemption of $1,000 that can be used to exempt any type of personal property including your motor vehicle.
The wildcard exemption can be combined with the motor vehicle exemption to fully exempt $5,000 of equity in a car. However, New York’s wildcard exemption is only available to you if you have not claimed a homestead exemption.
Can Married Couples Double New York’s Motor Vehicle Exemption?
Some states allow married couples filing a joint bankruptcy petition to double the listed exemption amounts. In New York, if you are a married couple filing a joint bankruptcy you are allowed to double your motor vehicle exemption, making it $8,000.
(To learn about the advantages and disadvantages of joint bankruptcy filings, see Nolo's section on Bankruptcy Options for Married Couples).
What Vehicles and Insurance Are Covered by the Motor Vehicle Exemption?
The New York motor vehicle exemption covers your car, truck, van, or other vehicle but it can only be used to exempt one vehicle. Further, any proceeds you receive from claims due to destruction or damage to your exempt vehicle are also exempt for up to a year after receipt.
Checking New York’s Exemption Laws
You can find New York’s motor vehicle exemption at New York Civil Practice Law and Rules § 5205(a)(8) and New York Debtor & Creditor Law § 282(1).
When the New York Exemption Amounts Are Updated
The exemption laws in New York change periodically. Make sure to check the latest exemption figures prior to filing bankruptcy.