When you file bankruptcy, the court requires that you list all of your liabilities and assets. In Chapter 7 bankruptcy, the court may seize your assets, sell them and use the profits to repay your creditors. While this may seem like the court will take everything you own, that is not true because of exemptions.
Each state sets its own exemptions, and there are also federal exemptions. You may choose to take either state or federal exemptions. However, you must use the exemptions you choose for your whole case. In other words, you cannot take a state exemption for one asset and a federal exemption for another. In any case, you want to choose the exemption option that allows you to keep the most important assets, such as your vehicle.
When it comes to your vehicle, the exemptions typically allow you to keep a lower value vehicle. If you own multiple vehicles, you may have to give the extra ones up. However, the exemptions do offer options that may allow you to keep multiple vehicles.
According to Cornell Law School, the vehicle exemption in New Jersey is $2,400. That means the resale value of your vehicle is exempt up to that amount.
If you currently have a loan on your vehicle, you may lose it if you are not current on the payments and you do not complete a reaffirmation agreement, which states that you will continue to pay off the loan and remain bound by the original terms of your loan agreement. Even so, if your equity in the vehicle is more than you owe and it exceeds the $2,400 exemption amount, then you would likely have to give it up.
The state also offers additional exemptions that could allow you to increase the total exemption for your vehicle to reach its total value and allow you to keep it. Be aware that you need to be careful when applying exemptions as not to make a mistake that leads to issues with your case.